Diesel Price Decrease May Help Food Prices

By:Hertha Ekandjo
First Capital Namibia CEO and economist Martin Mwinga says that a reduction in diesel price will have a beneficial impact on general prices, such as food prices.
This comes after the Mines and Energy Ministry announced on Friday that petrol prices will remain unchanged while the prices of both diesel products will decrease by 80 cents per litre, effective 3 May.
This is the second decrease for diesel price for the year, following the first in January.
Diesel is the predominant fuel used by commercial delivery trucks and farming activities.
“Whatever goes up must come down. We have experienced for a long time an increase in prices of almost every good and now this is good news,” Mwinga said.
He further expressed that he expects this change to have a productive result on prices of consumer goods.
According to the economist, oil is a major input in the production processes of companies making it a positive benefit in terms of the growth of the economy.
“We should soon be seeing an impact on the profitability of companies, because if you look at the production cost and you quantify the impact of that prime reduction, it will indeed have a positive impact ,” he explained.
Mwinga added that if fuel prices continue to decrease, new changes in terms of reinvestment of profits into the economy will start unveiling, which would be passed on to consumers.
Moreover, he emphasised that this change would not only benefit consumers alone but businesses as well.
In March, the Namibia Statistics Agency (NSA) reported that food inflation stood at 14.5% in February this year compared to 5.5% in the same month last year, while at the end of March 2023, 50% of consumable prices went up by 5%.
Food and non-alcoholic beverages and transport were the two main contributors to the annual inflation rate for February 2023 were.
For Namibia, the impact of high diesel and logistics costs has been particularly elevated as most goods are imported from South Africa.
Meanwhile, Namibia Bus and Taxi Association Secretary General Pendapala Nakathingo said the announced diesel decrease is a one-sided relief, but better.
Nakathingo questioned what would happen to those that do not use diesel but petrol.
“Decreasing diesel prices and leaving petrol unchanged is a bit challenging. But we appreciate the change, because when you decrease, it is a relief,” Nakathingo pointed out.
According to him, his office receives complaints from taxi and bus drivers regarding the high fuel prices, adding that with the many complaints he receives, there is not really much that they as an association can do.
“Complaints are a daily thing, but one cannot just make a one day light decision. We have been observing the situation and it is very tough,” he stressed.