There was relief in the spring air when the news of fuel price drop, the biggest drop in recent years, was shared hundreds of times within a few minutes of breaking. Fuel has become expensive. Without alternatives, there is not much we could do except grumble and pay. 

The price of diesel and petrol determines the inflation rate. Cost of transportation is a major driving force of inflation. Largely dependent on land transport, with all goods transported in the back of trucks, an increase in fuel price leads to an increase in the price of goods, including essentials, public transport and even housing.  This was evident from the reaction to the news of the fuel price change.  A common comment was calling for taxi drivers to “note the change” – in other words, to slash taxi fares.




While there is an automatic increase in fares and cost of transportation following a hike in fuel price, it is not so when the prices go down. With the price of diesel slashed by Nu 13 a litre and by Nu 12 for petrol, it is a big decline to bring an immediate impact on the cost of transport and therefore, essentials.

The high price of fuel, especially diesel, was attributed to policy interventions not being able to bring down the cost of goods. The government, to check inflation, slashed customs duty on goods imported from third countries not long ago. The duty covered almost 500 items, from fruits and vegetables, cereals and coffee, spices and seafood, which saw the duty by 30 to 40 percent. Did it bring down the cost? The answer is a big ‘no’ and the reason is that the increase in fuel price offset the slash in duty.




It might have been the case. However, with the biggest drop in fuel price, we should see the benefit trickle down to the consumers, starting from the cost of food, transport and construction materials. This would bring down the inflation rate.

As we enter the second quarter of the year, the inflation rate, which is already on a decline at 4.33 percent from the projected 5.5 percent, is good for the economy that is beginning, albeit slowly, to recover.  Global crude oil prices fluctuate every now and then. It determines the price of fuel. While we can only wish the new price to remain for months, even a year, the new price should benefit all. 

Relevant authorities should not leave it at the whims of transporters or those in the public transport business.