Fuel Price Reduction Catalyst for Economic Growth-Economist

An Economist says the decline in fuel prices for June 2025, presents a strategic opportunity to generate a multiplier effect across the Zambian economy.

On Saturday, Energy Regulation Board (ERB) announced a reduction in the price of diesel to K25.12 from K27.38, petrol to K31.36 from K32.14,  kerosene to K24.79 from K26.88 and Jet A-1 to K27.08 per litre.

Kelvin Chisanga noted that one of the most immediate and tangible outcomes of the fuel price decline is the increase in household purchasing power.

“As commuting and transportation costs decline, the prices of consumer goods and services tend to fall.”

“This is especially beneficial for low-income households, which typically allocate a larger portion of their income to basic necessities,” Mr. Chisanga noted.

He also observed that energy-intensive sectors such as mining, agriculture, and manufacturing are particularly well-positioned to capitalize on the cost reductions.

Mr. Chisanga said with more affordable fuel, the above sectors can ramp up production, improve efficiency, and enhance their export competitiveness.

“As we all know, fuel is such a fundamental input that goes across multiple sectors, particularly transportation, manufacturing, agriculture, and mining.”

“So a drop in oil and fats speak of strong economic factors at play. In short, low fuel cost translates directly into lower transportation costs and energy expenses, reducing the overall cost structure throughout the economy,” Mr. Chisanga stated.

He observed that businesses also stand to gain significantly from lower fuel costs through reduced operational and production expenses, thereby improving profit margins, and encouraging competitive pricing.

“These dynamics can boost consumer demand, which in turn supports job creation and attracts higher levels of investment, key contributors to economic expansion.”

Mr. Chisanga added that by improving household welfare, reducing business costs, and stimulating industrial growth, this development could serve as a powerful catalyst for inclusive and sustainable economic progress, provided that supportive policies and infrastructure are in place to maximize its benefits.