Surge in Fuel Prices Sparks Economic Concerns and Energy Sector Instability in Zambia
Economist Kelvin Chisanga has raised alarm bells over the recent surge in fuel prices in Zambia, emphasizing the potential for a cascading effect on prices and a negative impact on inflationary growth patterns.
Chisanga’s insights shed light on the intricate dynamics between fuel costs, essential commodities, and service delivery systems in the nation.
The marginal increment in the petroleum subsector is poised to bring about significant changes in the prices of key essential commodities.
These include disruptions to service delivery systems, influencing production costs, and altering the delivery processes of goods, works, and services.
Fuel, in this case, emerges as a fundamental factor affecting all aspects of the economic system.
Chisanga’s observations come in the wake of a concerted effort by Zambia and several other African countries, including Australia, Ghana, Kenya, South Africa, and Zimbabwe, to assess fuel costs on a monthly basis.
This proactive approach is a response to sustained supply conditions globally, exacerbated by geopolitical tensions between Russia and Ukraine.
The pricing models adopted by these nations involve regular reviews of fuel costs, triggering immediate upward adjustments that reverberate across various economic activities.
Unfortunately, this surge coincides with a period when production of both goods and services may face constraints due to increased fuel costs.
In the Zambian context, the intricate relationship between fuel and electricity in market systems adds a layer of complexity. Mr. Chisanga highlights the critical role of these two components in the supply value chains.
The potential for an erratic supply of electricity looms large, contingent on weather patterns favoring stable conditions.
The economist warns that fostering an increase in the energy sector during this period could have far-reaching consequences, impacting key fundamentals such as inflationary effects.
The anticipated increase in the energy sector is likely to affect aggregate demand in the economy, impacting both consumption and production areas. This comes at a time when Zambia has been striving for a steady growth path.
