Namibia: Rising Fuel Can Flame Inflation

93% appreciation of the Namibia dollar against the United States dollar.

Despite these favourable factors, the ministry noted significant under-recoveries on both petrol and diesel products in the domestic market, amounting to an under-recovery of about N$2.30 per litre on petrol and under-recoveries of about N$1.20 on diesel 50ppm, and approximately N%1.13 per litre on diesel 10ppm. An under-recovery happens when fuel consumers pay too little during a specific period, whilst an over- recovery means consumers are paying too much.

"Global oil prices are experiencing an upward trend due to a reduction in the supply of oil brought about by geopolitical tensions in the major oil markets, fewer drilling rigs that are in operation, and uncertainty surrounding oil production...The ministry wishes to highlight that Namibia as an oil-importing country is exposed to the developments in international oil market prices.

"This will trigger inflation as well. The oil price increases can stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Furthermore, increased oil prices can depress the supply of other goods because they increase the costs of production. Oil price increases are generally thought to increase inflation, and reduce economic growth.

Source: Energy Industry News (energyindustrynews.net)

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