Higher Fuel Costs Push Purchase Prices Higher in Zambia

Higher Fuel Costs Push Purchase Prices Higher in Zambia

Higher fuel costs pushed up purchase prices higher in Zambia for the 10th month as business confidence dropped to a 14-month low, according to Stanbic IBTC Purchasing Manager Index released today.

According to the report, the opening month of the second quarter of the year saw returns to growth of output, new orders and employment in the Zambian private sector.

However, there were further signs of building inflationary pressures amid widespread reports of higher fuel costs. PMI report for the month raised concerns around the impact of rising prices led business confidence to fall to a 14-month low.

The headline PMI rose back above the 50.0 no-change mark during April, posting 50.5 from 49.6 in March, according to the report.

Stanbic IBTC PMI said the reading signalled a marginal improvement in business conditions, the second in the past three months.

The PMI report stated that stronger operating conditions in Namibia largely flowed from improvements in demand and higher customer numbers.

These factors were highlighted by firms as having supported returns to growth of output and new orders in April, it added. The rise in activity was the first in five months, according to the report, with each of the broad sectors covered by the survey posting increases.

“Rates of expansion in both output and new orders were only marginal, however, amid reports that money shortages had limited the improvement in demand.

“Employment also returned to growth following a reduction in March, but rising new orders imparted pressure on firms’ capacity. In fact, backlogs of work increased to the greatest extent since January 2020. Inflationary pressures continued to build in April.

“Higher fuel costs pushed up purchase prices to the greatest extent in ten months, while staff costs also rose. In turn, companies raised their own selling prices at the fastest pace since July last year, with charges now having increased in three successive months”, it explained.

Private sector data in Namibia indicated that cost pressures were most pronounced in the construction and manufacturing sectors. New order growth encouraged companies to expand their purchasing activity. Input buying rose for the seventh month running, and to the greatest extent since last November, the report said.

In turn, stocks of purchases also rose, with efforts to build inventories helped by a shortening of suppliers’ delivery times for the first time in nine months. Respondents indicated that competition among suppliers had led to quicker deliveries, the report said.

“Although signs of improving demand meant that companies maintained a positive outlook for activity over the coming year, concerns around the impact of price rises led to a drop in sentiment.  Confidence was the lowest since February 2021 and well below the series average”.

Commenting, Victor Chileshe, Head of Global Markets at Stanbic Bank said, “Higher fuel prices have pushed up purchase prices. It is also expected that these rises in costs will be pushed through to consumers. READ: Sell Pressures Push T-Bills, Bond Yields Higher

“Concerns around the cost outlook of the future have seen a drop in sentiment, the lowest seen since February 2021. Businesses have also seen a rise in demand which has been positive for them in April.” #Higher Fuel Costs Push Purchase Prices Higher in Zambia