Devaluation and Vat boost fuel
prices
[posted 19 April 2011, 1500]
Consumers in Fiji would have been paying
22.5% less for fuel had the Fiji dollar not been devalued by 20% and VAT not
increased to 15% from January this year.
This would have meant a current fuel price
of $1.94c per litre for motor spirit (gasoline) instead of the $2.50 per
litre announced today - almost a quarter less than the new increased price.
Motorists will be paying $2.50 per litre
for motor spirit from next week, $2.28 per litre for diesel, 2.47 per litre
for pre-mix and $1.88 for a litre of kerosene. Kerosene has seen the biggest
hike, up 20c a litre.
The hike will further fuel inflation which
currently stands at a high of 7%, as the cost of goods and services go up
correspondingly. The price of locally manufactured consumer items will rise
in due course. Increases in transportation cost will see further hikes in
market produce and a wide range of supermarket goods. The cost of carting
cane to the mills is likely to go up and so may the cost of services in
general.
Nor can one rule out the possibility of
further hikes in the cost of electricity, such is the far-reaching
multiplier effect of any increase in fuel costs.
Generally cost increases are passed on to
the consumer – this is even more likely in the current highly depressed
business climate with companies working on very tight margins.
The worst impact of the 12% increase in
fuel prices will be on lower paid workers and the poor and needy. They are
already struggling under the devastating impact of increases in prices of
all goods and services since the devaluation of the Fiji dollar in April
2009 and 15% VAT from January this year.
Announcing the fuel price increase
yesterday, Commerce Minister Aiyaz Sayed Khaiyyum, called on people to
consume energy wisely. With electricity charges at a premium of 35c per
unit, it is hardly conceivable that people will not already be economising
on their electricity usage.
One wonders, however, whether similar
constraints are being exercised by those in the higher echelons of public
office, and in the use of State owned vehicles.
LR Vayeshnoi |