Ethiopia’s gas prices have soared as the government ends its subsidy, leaving many Ethiopians struggling to cope with the increased cost of living.
The Ministry of Trade and Regional Integration made the announcement that starting from September 30, 2023, the price of a litre of gas will be set at 77.79 Ethiopian Birr, which is more than five times the previous price of 15.76 Birr.
This significant increase in gas prices has caught many citizens off guard and has left them wondering why the government chose to end the subsidy at a time when the cost of living is already unbearable for a large portion of the population.
The Ethiopian government had been subsidising gas prices for over a year but has now decided to withdraw its support, creating a burden on the Ethiopian economy.
In addition to the already existing inflation in other goods, the rise in gas prices is expected to have a profound impact on both the demand and supply within the country. Alemayehu Kebede, an economist, has stated that this gas price hike will have far-reaching consequences and will further exacerbate the economic challenges faced by Ethiopians.
Another Ethiopian economist, Fethawork Wondewossen, has expressed concern about the government’s decision to increase gas prices while claiming to be working on reducing inflation in other areas. This move seems contradictory and raises questions about the government’s overall economic strategy.
The increase in gas prices will undoubtedly have a direct impact on transportation costs, which will, in turn, affect the prices of goods and services throughout the country. This will not only burden the average citizen but will also pose challenges for businesses and industries that depend heavily on transportation.
One of the major concerns resulting from the gas price increase is the potential for decreased consumer spending. As gas prices rise, people have less disposable income available for other expenses, leading to a decrease in overall consumer demand. This decrease in demand can have a ripple effect on the economy, impacting various sectors, such as retail, hospitality, and tourism.
The source also interviewed professionals in the transportation sector in the capital who shared their concerns about the negative impact of the price increase on both themselves and their clients.
According to the Ethiopian Statistics Service, the inflation rate for the month of August reached 28.2 percent nationwide, as announced this week.