Prices of food, petrol and electricity all up
. . . as El Nino induced drought seals hardships for consumers
RETHABILE MOHONO
Maseru– Life is set to become more unbearable as essentials such food, petrol and electricity have all increased almost simultaneously. The Lesotho Flour Mills this week announced a 7% price adjustment on all maize products, effective April 8th. This decision follows a significant increase in Safex maize prices during March 2024.
The South African Futures Exchange (Safex) is the futures exchange subsidiary of JSE Limited, the Johannesburg-based exchange. It consists of two divisions; a financial markets division for trading of equity derivatives and an agricultural markets division (AMD) for trading of agricultural derivatives.
Lesotho Flour Mills prices are based on SAFEX.
In its statement it highlighted that while white maize traded between R3,700 and R3,900 per metric ton in January, recent levels have shot up to as high as R5,300.
“This spike follows high temperatures and low rainfall experienced during February and March 2024,” the statement stated.
It went on to indicate that major maize production crop failures are expected across Southern Africa because of the adverse El Nino weather phenomenon, which caused the surge in maize prices.
Further price increases are expected early next month, with wholesale prices projected to reach up to M8,800 per metric ton. This comes as an additional burden as consumers are also facing increased electricity tariffs with a nearly 10 percent hike. The Lesotho Electricity and Water Authority (LEWA) revealed that it approved a 9.6286 percent increase in energy and maximum demand tariffs, along with a 5.0 percent rise in the lifeline tariff.
The new rates came into effect on April 1, 2024.
The energy and maximum demand tariff is charged for consumers who gobble more power, especially in the commercial sector, and the “lifeline” tariff is mainly for domestic users.
According to LEWA, LEC has requested a 23 percent adjustment for the “maximum demand” category and a 15 percent adjustment for the “lifeline” category for the financial years 2023/24, 2024/25, and 2025/26 in order to meet its financial goals.
LEWA stated that the approved tariffs for the previous financial year will still be in effect for the current financial year, resulting in under-recovery. Therefore, the new, higher increase will be implemented for the financial years 2024/2025 and 2025/2026.
This electricity hike comes as an additional financial strain due to the recent surge in petrol prices. The Petroleum Fund has also reported a substantial increase in fuel expenses, which comes after last month increase. On Wednesday this week, there were adjustments made to the prices of petroleum products.
Petrol93 went up by M0.45 leading to new price of M22.70, as Petrol95 increased by M0.45, resulting in a price of M23.15, while Diesel50 and paraffin remained unchanged at M23.35 and M17.60, respectively.
Also on April 1, there have been adjustments made to the prices of petroleum products. Petrol93 rose by M2.45 to a new price of M22.25 per litre. Petrol95 also experienced an increase of M2.45 per litre, resulting in a price of M22.70 per litre. Additionally, Diesel50 witnessed an increase of M1.80 per litre, bringing the price to M23.35 per litre, while the price of Illuminating Paraffin has gone up by M1.10 per litre, resulting in a new price of M17.60 per litre.
Similarly, on February 7, 2024, there were also changes in the prices of petroleum products further squeezing the already struggling consumers as international crude oil prices increased and the Loti/ Rand weakened against the US dollar.
On the other hand, Lesotho Bureau of Statistics reports stated that food costs in Lesotho also increased by 11.70 percent in January of 2024 over the same month in the previous year. Food inflation in Lesotho averaged 7.77 percent from 2003 until 2024, reaching an all-time high of 18.72 percent in January of 2003 and a record low of 0.67 percent in December of 2003.
Speaking to this publication economic commentator, Topollo Motlamelle, noted that climate change is a significant factor contributing to the rise in prices across various sectors.
“The adverse impact of prolonged dry seasons has severely affected agriculture, not only in Lesotho but also in neighbouring South Africa that we heavily depend on,” he said, explaining that there has been a noticeable decline in crop production this year.
He also pointed out that the current conflict between Russia and Ukraine is a significant factor driving up food prices. “We must consider that Russia is responsible for around 40% of grain production, so it’s natural for prices to rise when a major grain producer is involved in a war,” he explained.
Motlamelle also proposed that as the situation worsens, the government of Lesotho may need to provide subsidies for essential items. He emphasized that maize is a crucial part of their diet, and if people cannot afford it, it would lead to extreme poverty.
