HARARE– Zimbabwe’s government on Monday hiked petrol prices by about 22 percent to $7,45 per litre, from $6,10 per litre the latest such increase in two weeks, as pressure mounts on authorities to keep petrol and diesel stocks rolling in.
Energy regulator, Zimbabwe Energy Regulatory Authority, said in a statement to the industry that diesel price would immediately rise to $7,19 per litre, from $5,84, a 23 percent rise said by analysts to have been caused by the need to keep pace with the value of the domestic currency against the US dollar.
The Zimbabwe dollar opened at $8,9;$1 on the interbank market on Monday, after closing at around the same rate on Friday.
Still, the new prices meant that Zimbabwe’s fuel remained among the cheapest in southern Africa, selling at less than US$1 per litre, one of the reasons why winding queues at service stations, which started mid-2018, continue to affect motorists.
The country is facing a serious foreign currency crisis, which forced government to remove a cap on the exchange rate last year, to allow petroleum firms to secure greenbacks that are required for imports.
In Harare, commuter omnibus operators immediately hiked fares, leaving a lot of hard-pressed travellers in a tight corner, as the few who are still in formal employment have had no salary adjustments for many years.
The latest fuel price adjustments will also leave consumers worse off, as retailers were likely to effect a fresh wave of price hikes for basic commodities, which are already priced way above the reach of many Zimbabweans.
This will have dire implications on the inflation rate, which, at 176 percent, is already the highest in Africa.
Fuel price hikes in January triggered mass protests in major cities that saw the police and army being deployed deal with a potentially serious crisis.
Opposition groups have been threatening to embark on fresh demonstrations again growing hardships.
Commenting on the fuel new prices, Harare based advisory firm, Econometer Capital said Zimbabwe was losing its war against inflation.
“Fuel prices and inflation are often seen as being connected in a cause-and-effect relationship,” Econometer said.
“As the price of petroleum products moves up or down, inflation follows the same direction. Year-on-year inflation for the month of June rose to 175,66 percent, the highest in 10 years. This immediately evoked fears that Zimbabwe could be retracing the hyperinflationary era. The year on year food and non-alcoholic beverages inflation was at 251,94 percent whilst the non-food inflation rate was 143,94 percent. The month on month inflation rate in June 2019 was 39.26 percent advancing 26,72 percentage points on the May 2019 rate of 12,54 percent raising fears that the economy is heading towards hyperinflation. With the real sector underperforming, domestic output will for the larger part of the year remain subdued while imports will grow. Under this current mono-currency system, a growing import bill will push the exchange rate and ultimately consumer prices. As it stands government seems to be losing its battle on inflation as there are no quick-wins to turnaround the economy. We still maintain our view that annual inflation by year end should be around 480 percent,” said Econometer.