Economists urge energy price cut to lower inflation

(File photo: Ameer Khalifeh/Jordan News)
AMMAN — Economists urged the government to consider viable reductions to energy bill to mitigate its impact on their rising inflation.اضافة اعلان

Inflation rose by 5.36 percent last month, compared with August 2021, according to the Department of Statistics data released on Sunday.

In its monthly report on the general consumer price index for August 2022, the department said inflation reached 108.18 points, compared with 102.68 points in August 2021, a 5.36 percent increase.

Fuel and lighting contributed the largest chunk of 31.59 percent to the hike, according to the report. Others included transportation with 6.89 percent, rents 4.48 percent, culture and entertainment 14.2 percent, and healthcare 6.97 percent.

Economist Mohammad Al-Basheer said that “the rate of increase is large, given that consumers are suffering from difficult conditions as a result of high prices in light of eroding incomes and high unemployment rates.”

“All of those circumstances combined exacerbate the difficult situation on producers, as it will be difficult for them to sell their products,” Basheer told Jordan News.

“This will slow down the economic wheel,” he added.

He asserted that the government should deal “more flexibly with the energy dossier”, which will lead to a reduction in inflation.

“The global prices of oil derivatives increased more than once this year, and in turn, we in Jordan also raised the prices as well,” he said. “But when it came to the prices falling worldwide, the government reduced the price of oil derivatives slightly.”

Economist Mazen Irshaid said that the rise in the inflation rate was expected. He said that the increase “maintained the five percent level for three months in a row now”.

“Fuel and food were among the main reasons for the rise in inflation, and here it must be remembered that more than 85 percent of our basic needs are imported from abroad”, Irshaid said.

He maintained that “imported goods from abroad are subject to global prices, and they experienced a significant hike in price in the past few months.”

“Therefore, a rise in inflation in Jordan was expected,” he told Jordan News.

He said that it is expected that the inflation rate will fall next month because the “price of oil derivatives have fallen”.

“Despite the decline in food prices as well, I expect that a reduction in the price of oil derivatives, in particular, will bear the greatest impact on a decreased rate of inflation,” he pointed out.

Analyst Hussam Ayesh said that figures and rates indicate that the purchasing power of citizens has “clearly eroded.”

He explained that “raising the interest rate leads to an increase in costs, which in turn also leads to an increase in prices, and therefore this affects the purchasing power of citizens.”

“On the ground, it is noted that the inflation rate is higher than in the official statistics, especially with regard to the weak purchasing power and the weak economic wheel that is being witnessed nowadays,” he concluded.

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