Harare – Barely a week after another round of fuel price hike, the Zimbabwe Energy Regulatory Authority (ZERA) has increased the price of petrol and diesel again in what it says the change is due to the FOB price movements.
According to the announcement by ZERA on Tuesday, the new price of petrol is now $7.55 per litre from $7.45/litre whilst diesel is now selling at $7.22/litre from $7.19.
It is important noting that the hike in fuel prices lately has been aligned to Finance Minister, Mthuli Ncube’s wish to have the price of fuel in line with the interbank market value of US$1.
Using exchange rates last updated earlier today on Market Watch, it suggests that exchange rates on the interbank market are trading at USD/ZWL$ 1:9.09, whilst rates on the parallel market are trading at USD/ZWL$ 1:10.6.
The above exchange rate structures shows that even at the latest price hikes, fuel is still selling short of the envisioned target by the treasury chief triggering an expectation that a series of price hikes is going to continue, more rapidly.
Meanwhile, exchange rates even following the introduction SI142 of 2019 have not shown a sign of settling down, particularly the interbank market having recorded the most significant increase, in what authorities say it’s a positive movement towards converging with the parallel market.
An upward movement in the price of fuel automatically evokes a spike in the prices of every other basic goods and commodities which is further worsening fears of the economy heading towards hyperinflation and subsequent recession in 2019.
June inflation came off at 176% year on year whilst month on month inflation was recorded at 39.26% from 12.54% in May. The academic mark for hyperinflation is 50% month on month.
Despite a series of increases in the prices, shortages of fuel remain and queues have become a key feature.
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, firstname.lastname@example.org and email@example.com.