Analysts warn of rising cost of living due to fuel hike

DAR ES SALAAM: ANALYSTS have warned that the recent sharp increase in fuel prices will have far-reaching economic consequences, driving up the cost of living and disproportionately affecting low-income households.

Speaking to Daily News, economist-cum-investment banker, Dr Hildebrand Shayo said fuel is a universal input whose rising cost impacts nearly every sector of the economy. He explained that higher petrol and diesel prices increase transportation costs, which in turn push up the prices of food, manufactured goods and services.

“This leads to cost-push inflation, ultimately reducing purchasing power across the economy,” he said, adding that higher operating costs can also hinder production, reduce business profits and discourage investment.

Dr Shayo noted that the impact is more severe for low-income households, as they spend a larger share of their income on transport and essential goods.

“Households are forced to cut back on their consumption as fares increase and food prices rise, which worsens poverty and heightens inequality. Workers in the informal sector, who rely on daily mobility, are especially vulnerable,” he added.

To mitigate these effects, he suggested a mix of structural reforms and short-term relief measures, including stabilisation funds or tax adjustments to cushion global price fluctuations, as well as targeted subsidies for fuel or public transport.

He also underscored the importance of investing in alternative transport options such as railways, efficient public transport systems and natural gas, while stressing the need to reduce reliance on global oil markets through greater utilisation of domestic energy resources.

Economics and finance analyst, Kelvin Msangi said the burden of rising fuel prices will be uneven across the country, with remote areas likely to face higher costs due to transport and distribution challenges.

He added that the situation reflects a broader regional issue, as East Africa remains heavily dependent on import corridors, making it vulnerable to global fuel price shocks and supply chain disruptions.

However, the government has already stepped in to address rising fuel prices, with Prime Minister Mwigulu Nchemba saying authorities will convene a meeting to ensure the commodity remains affordable and does not escalate the cost of living.

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Speaking in the National Assembly in Dodoma on Wednesday while presenting his office’s income and expenditure proposal for the 2026/27 fiscal year, Dr Nchemba said the government is also prioritising the use of domestic natural gas to cushion the impact of global price shocks.

“We are seeing fuel prices rising. We will sit, as the government, to see how we can address this and ensure that citizens access the commodity at an affordable price,” he told lawmakers.

He said despite global and regional security challenges, particularly in the Middle East, the government has maintained oversight of fuel supply to ensure availability and relative price stability.

“This has enabled economic and social activities to continue without major disruption,” he said.

The analysts’ remarks come as motorists brace for higher costs following a significant rise in fuel prices announced by the Energy and Water Utilities Regulatory Authority (EWURA).

According to a statement released on Wednesday, the new prices, which took effect on the same day, show that a litre of petrol in Dar es Salaam now retails at 3,820/-, while diesel is priced at 3,806/-.

This represents a sharp increase, with petrol rising by 956/- from 2,723.97/- recorded in March, while diesel has gone up by 948/- from 2,858/- in the previous month. EWURA attributed the price adjustments largely to ongoing geopolitical tensions in the Middle East involving the United States, Israel and Iran, which began in February.

“Attacks on oil fields, storage facilities and refineries, coupled with Iran’s closure of the Strait of Hormuz, a route that handles around 20 per cent of globally transported oil, have disrupted oil production in a region from which Tanzania sources much of its fuel,” the statement noted.

The authority added that the situation has also driven up shipping costs due to a shortage of cargo vessels, alongside increased insurance premiums.

Despite the surge, EWURA said the rise reflects a broader global trend, noting that Tanzania is taking measures to safeguard fuel supply while attempting to keep prices as affordable as possible to limit economic and social impacts. Under the new pricing structure, motorists in Dar es Salaam will pay 3,820/- per litre of petrol, while Kyerwa (Ruberwa) in Kagera Region records the highest price at 4,092/- per litre.

At these rates, consumers across regions can purchase approximately two to two and a half litres of petrol with 10,000/-. EWURA has urged citizens to use fuel efficiently and responsibly, while assuring the public that current petroleum reserves remain sufficient to meet domestic demand despite ongoing geopolitical tensions.