By Catherine Sasman
WINDHOEK – The new petrol and diesel price increases effected last night will negatively affect consumers as well as government revenue, said economist Martin Mwinga.
“These increases have come at the wrong time since we have seen rising inflation rates, which will depress real disposable income, and the government is likely to lose revenue because personal consumption amounts to more than 60% of Namibia’s GDP [Gross Domestic Product].”
The petrol price has increased by 25 cents a litre, while the diesel price has gone up by 6 cents a litre.
The fuel price increases are the third this year, due to the upward fluctuations in international crude oil prices, said Deputy Director for Petroleum and Gas with the Ministry of Mines and Energy, Immanuel Nghishoongele.
“We do take cognizance of the negative economic impact, but we have no choice but to increase petrol and diesel prices,” he said.
Patrick Hashingola, Group Manager: Public Relations with the Ohlthaver & List Group, said that prices at Model Pick ‘n Pay chain stores will not be affected immediately. Price revisions, he said, are done yearly and not randomly, depending on the retail prices.
Johan de Bruin, senior buyer with Woermann Brock & Co. said the commodity prices are likely to increase by five to eight percent due to the fuel prices.
“The recent increases will push up everything,” added Director of Woermann Brock & Co., Jesko Woermann.
Commodity prices, he said, have been on the increase over the last six to eight months due to the inflation pressure.
The official inflation rate is 7.4%.
“The petrol increase is just another drop in an already overflowing bucket,” he commented.
Items imported from South Africa – where fuel prices are even higher than in Namibia – are especially likely to increase in price, with commodity supplies like flour and mealie meal already having experienced price increases three times since the beginning of this year.
But, said Woermann, the situation is not as bad as it was in the mid-80s when inflation peaked at 14 to 18%.
However, the current increases, he said, will result in less spending, and pressure on bonuses and salaries.
“The prices are not likely to recover; nothing ever goes down significantly,” he said.
“Consumers will either get into debt or borrow from cash loan facilities,” said Mwinga. “Cash loan institutions are likely to do well because banks will be more hesitant to lend money.”