Consumer Trust Unity Society (CUTS) coordinator Chennai Mukumba says a huge percentage of the Zambian population is going to be relegated to the category of people living in poverty following increased fuel prices.
Commenting on the Energy Regulation Board’s (ERB) increased fuel prices, which subsequently triggered an upward adjustment of bus fares by 22 per cent in Lusaka, Mukumba said the increment has a spiral effect, which would cause an increase in the prices on commodities and relegate a huge percentage of the population into the poverty category.
“I mean there are three impacts that should be noted. Transportation obviously affects consumers, something that has to be noticed. Transportation is what we call inelastic goods so regardless of how much the cost of transportation goes up, many people do need to use transportation in order to get on with their day-to-day lives. People need to get to work, people need to drop their kids at school and most of those journeys are not leisure. It’s a necessary component. So, what that means is that, the proportion or the allocation that comes from spending on transportation is likely going to increase. And if you are, for example, a high earning consumer, there is a difference in the minimum of money that you can allocate in your monthly budget to cater for that increase. But if you are a low income consumer, already, the amount of money that you have, most of it is already being used on goods and services that you need such as groceries,” Makumba told News Diggers! in an interview in Lusaka.
“So, what we may see is that money is being allocated, for example, to transportation is taking some money that the household had committed towards other very necessary parts of the day-to-day [expenses]; whether it’s food, whether it’s medicine. And so that will depend on the needs of a household. Many consumers will start taking away money meant for the day-to-day activities towards transport and this is going to be one of the numerous effects of the increase in fuel and commodity prices. We need to take a look at how our economy is doing, and our statistics are showing you that more than 60 per cent of the population is living in poverty, which means this part of the population is already squeezed in incomes that they are earning.”
She said the increment would put pressure on households and that certain goods and services would become a luxury instead of a necessity.
“And just on that alone, if we are to see an improvement in the cost of living, it is going to put much pressure on individual households, and essentially have negative effects in terms of their welfare. And another implication we may see is more people starting to go into the category of people in poverty. This will relegate people into more and more poverty because of this increase in cost of living. So, I think for us, these effects are happening on a day-to-day life and because they have higher poverty levels, inequality is high, too; it going to affect the general population at large and many more people are going to fall into the category of the poor,” cautioned Makumba.