Fuel Price Will Drive Inflation

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By Francis Tsawayo WINDHOEK Fuel prices have not yet taken effect on stock lists on the NSX, the Chief Executive Officer of the Namibian Stock Exchange John D. Mandy told New Era. Namibia is grappling with a series of fuel prices that have gone up four times in a period of six months and the frequency reduced with each adjustment. According to Mandy, the fuel price hikes will not likely have an impact on stock as yet but on most other business sectors. “Fuel would have had a major impact had there been oil companies listed on the NSX,” said Mandy. “In the case of Sasol, an oil company trading on the Johannesburg Stock Exchange, the share price would likely increase. The industry has become lucrative with the current situation surrounding oil-producing countries,” explained the CEO. Mandy revealed that in cases where companies order and hold large supplies of oil and the price increases, they stand to benefit. This could also influence the company’s share prices positively once listed. Commenting on the current situation, Mandy said the National Consumer Index (NCI) is an area that needs immediate attention. “Fuel has set in motion an ongoing effect in most sectors of the economy – the manufacturing industries, transport and retail sectors being the immediately affected,” he noted. The knock-on effect will start from the immediately affected sectors to the point where the bank interest rates go up and eventually lead to inflation. Referring to statistics of the national consumer index, Mandy noted that inflation had gone up by two full points from 3.4 to 5.4, which is a matter of concern, he warned. Though the (NCI) indicators are likely to be the most affected, Mandy believes there are other factors and implications that the fuel price exerts on the economy. “They are so many factors that come into play and their implications are only visible after a period of time which makes it difficult to make an assessment that would stand,” he stated. “Evidently the cost of living has risen and would continue to rise if the trend continued,” reiterated the NSX guru whose remarks echo those previously made by other renowned economists in the country Klause Schade (Nepru) and Martin Mwinga (FNB). The two predicted changes that will have major implications on home loan owners and the general public at large as well as the cost of living.