The recent supply cuts in both Saudi Arabia and Russia have led to meaningful gains in oil prices, with Brent crude trading at US$89.5/bbl (at the time of writing), up from this year’s low of US$71.8/bbl in May.
The elevated oil prices have come at a time when supply inventories are poor and signs of a slower global growth backdrop continue to linger given poorer-than-anticipated economic activity from China. The higher oil prices suggest that upward adjustments can be anticipated in the September/October fuel adjustments across our key jurisdictions.
Recently, Namibia adjusted its pump prices by N$1.20/l across diesel and petrol as of 6 September, while Zambia adjusted its pump prices by 15 percent as at 1 September. Elevated prices could mean further upward adjustments in inflation forecasts. We therefore caution that transport inflation could remain upwardly stickly for longer, with risks that inflation could edge higher.