The fuel price increase announced this week is expected to push transport inflation higher into double-digit figures, which will ultimately contribute to rising inflation rates, the Economic Association of Namibia has said.
“Motorists need to explore ways to use transport equipment more efficiently in order to cushion against rising costs of transport,” the association said in a statement.
The Ministry of Mines and Energy (MME) announced a fuel price increase of 50 cents per litre with effect from Wednesday.
It said the increase was as a result of the depreciation of the Namibia dollar against the US dollar and rising global oil prices.
The increase means pump prices at Walvis Bay will be Unleaded Petrol (N$13,45), Diesel 500PPM (N$13,78) and Diesel 50PPM (N$13,83).
The Organization of the Petroleum Exporting Countries (OPEC) basket price averaged around US$83.28 a barrel this week.
Economic Association of Namibia said based on daily South African Reserve Bank exchange rates, the Namibia dollar weakened by 4.8 percent against the US dollar between August (monthly average of N$14.06 per US dollar) and September 2018 (monthly average of N$ 14.79 per US dollar).
In addition, monthly average oil prices in US dollar for Europe Brent oil increased by 7.8 percent to US$78.09 per barrel between August and 24 September 2018.
It is the highest monthly average oil price since November 2014 and 39.1 percent higher than a year ago, the association said.
The combined effect of currency depreciation and higher global oil prices resulted in the cost of oil in Namibia dollar increasing in September by 13 percent compared to August and by 56.6 percent compared to September 2017.
“While Namibians are facing the highest petrol and diesel prices so far, they are still below prices in South Africa. South Africans have to pay ZAR15.49 per litre at the coast and ZAR16.08 per litre in Gauteng for petrol,” the association said.
It said the main root causes of rising oil prices are the withdrawal of the USA from the Iran deal and the re-implementation of sanctions against the country as well as the turmoil in Venezuela that has resulted in a drop in oil production.
The Automobile Association (AA) of South Africa on Friday warned that fuel users are facing unprecedented price increases that it described as “catastrophic” for road users.
The AA noted that the major culprit is the country’s economic policy which has left South Africans defenceless against upticks in international oil prices.