Free Access | 2024-04-12

What does the sustained increase in global fuel prices mean for Uganda?

Authors/Editors: Tony Odokonyero

Abstract:

The sustained rise in the cost of energy, in particular fuel, continues to affect the global and domestic economies adversely. By July 2022, the domestic price for diesel and petrol in Uganda had increased by 71.5% and 56.1% compared to July 2021. Fuel supply in Uganda continues to be suppressed because of global oil supply disruptions amidst demand recovery from the COVID19-induced historical decline. This has driven international prices to record high levels over the past three decades. Local pump prices in Uganda are affected due to international price transmissions as well as domestic market factors. Given the critical role of fuel energy in stabilizing prices and production costs, key aspects of the economy will be potentially devastated – e.g., production, including manufacturing, transportation sector, and household welfare due to cost-push inflation. Feasible measures to cushion the economy include establishing regulatory intervention to control potential manipulation of fuel price movements and instituting a strong fuel reserve system.