Regional Bureau Johannesburg
• Fuel prices were already inflated before the Ukraine crisis. Countries in the region were already feeling the impacts in 2021/22, given the heavy dependence on imported crude oil and petroleum products.
• With the onset of the Ukraine crisis, the price of crude oil reacted sharply to the crisis, reaching its highest level since 2014, currently oscillating between $100/barrel and $110/barrel. This is +10- 50% compared to early Feb 2022. The global price movement is reflected in Southern African countries where fuel in March increased by 10-26 percent, with further increases expected in the months to come.
• The rise in food and fuel prices stemming from the war is already accelerating inflation in regional countries. In addition, global freight costs increased by 21 percent on major grains and oil seed routes and locally the Durban freight rates have more than doubled for cereals, pulses, and vegetable oils.
• Rising food prices are posing a major threat to food security in a region already facing conflict, extreme climatic conditions, and the COVID-19 pandemic. This will have direct implications on the cost of WFP pipeline which is projected to increase by 25-30 percent.
• South Africa, Zambia, Tanzania, and Malawi, the 4 key suppliers of maize in the region, are highly import dependent for fertilizer. The further rise in fertilizer prices will translate into their lower accessibility, with implications for planting and yield prospects in the next agricultural season.
• Limited fiscal space, weakening domestic currencies, and debt overhangs from COVID-19 continue to constrain the ability of regional governments to react and strengthen social safety nets needed to protect their most vulnerable.
• Short-term measures governments are implementing, mainly the provision of temporary fuel sub-sidies, are not sufficient to fully cushion consumers from increasing food and fuel prices, with huge implications on food security.