Fuel prices surge by 33% in just six months: a global economic impact.

Fuel prices have skyrocketed by more than 33% in just six months, piling pressure on households and businesses. According to industry data tracked by JoyNews Research, the National Petroleum Authority raised its benchmark price floor for petrol to GH¢14.53 per litre and diesel to GH¢16.97 per litre for the first pricing window of August.

Price Hike Continues to Bite

The price hike has been relentless, with oil marketing companies responding with prices way above the floor. The average price of petrol and diesel is now selling at GH¢15.98 and GH¢17.30 respectively. The Ghana Private Road Transport Union has been pushing for a 30% fare increase, but has suspended it after the government's diesel relief.

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Government Relief Measures Fall Short

The government has responded with temporary relief measures, including a GH¢2.00 per litre reduction in the regulatory margin on diesel in early August. However, such steps come at a cost to revenue. Ghana fully deregulated petroleum pricing in 2015, meaning international price shocks reach consumers faster than in neighbouring countries that still subsidise fuel.

Drivers of the Price Surge

Two main forces have driven the surge in fuel prices. The cedi has weakened by more than 10% against the U.S. dollar since the start of the year, feeding directly into pump prices. The second driver is the Middle East crisis, which pushed Brent crude sharply higher earlier in the year, and has kept prices elevated amid tensions around the Strait of Hormuz, a chokepoint for global oil shipments.

Economic Risks Loom Large

The Bank of Ghana has flagged elevated crude prices and Middle East tensions as key upside risks to the outlook. With the cedi still under pressure and crude prices volatile, analysts say the relief may prove short-lived. The country's inflation eased to 4.6% in July, its first slowdown since March, but the underlying factors driving the price surge remain in place.

What Happens Next

The Ghana Private Road Transport Union has vowed to monitor the next two pricing windows in August before deciding whether to proceed with the 30% fare increase. The union warned that a further rise in fuel prices could force it to revisit the hike. The government's relief measures may have provided temporary respite, but the underlying economic risks and drivers of the price surge remain in place, setting the stage for continued economic uncertainty.

Source: JOY