By Eddison A. Mombera MBA-Oil, Gas and Energy Management Expert
World over, the Russia–Ukraine war and now the Israel–Iran conflict have torn through the oil supply chain from upstream production to downstream distribution and pricing.
Shipping routes have been disrupted, insurance and freight costs have risen, and suppliers have shifted to shorter pricing cycles because volatility is so extreme. Malawi is now feeling the full force of this.
The latest MERA notice on the Review of the Retail Price of Petrol and Diesel for March 2026 makes it plain: since the last adjustment in January, average FOB prices have risen by 42% for petrol and 87% for diesel.
Under the Automatic Pricing Mechanism (APM), this pushed pump prices up by 34% and 35%, effective 1 April 2026.
MERA explicitly links this to the Middle East conflict and the resulting disruption to the global supply chain.
This is not a local accident. It is a global shock landing on a structurally exposed economy.
How global shocks become Malawi’s inflation
Malawi imports 100% of its fuel, has no refinery, and depends on long, costly corridors through ports in neighbouring countries.
When global prices rise, Malawi’s landed costs rise.
When suppliers move from monthly to fortnightly pricing because of volatility, Malawi’s exposure increases.
The APM then passes these higher costs directly to the pump — and that is where costpush inflation begins.
Transport: Higher fuel prices raise the cost of moving people and goods.
Agriculture: Fuel touches everything — land preparation, irrigation, fertilizer distribution, produce collection and delivery.
Food prices: Higher farm and transport costs feed directly into higher food prices.
Manufacturing and services: Businesses relying on diesel generators face higher operating costs, which are passed on to consumers.
This is the essence of costpush inflation: prices rise not because demand is booming, but because the cost of producing and delivering goods has gone up.
For a lowincome, agriculturedriven economy, this is especially dangerous.
Across the world, governments are not just explaining price increases, they are intervening to shield their economies.
What other countries are doing?
In the United States, authorities have imposed temporary purchase caps and, in some crises, released fuel from strategic petroleum reserves, measures that prevent panic buying and stabilize supply, though they require costly replenishment and offer only shortterm relief.
Vietnam has cut fuel taxes during supply disruptions, providing immediate relief at the pump and helping contain inflation, albeit at the expense of government revenue and fiscal space.
Japan has reactivated coalfired power plants to ease pressure on oilfired generation and preserve liquid fuel stocks, strengthening energy security but compromising environmental goals.
India has adjusted fuel levies and excise duties to stabilize pump prices during global spikes, supporting price stability but straining public finances.
Tanzania has diversified its procurement channels, including sourcing refined products from Nigeria’s Dangote refinery, reducing exposure to Middle Eastern volatility though requiring strong logistics and longterm contracts.
And within the region, Zambia has taken decisive fiscal action: the government has approved the zerorating of VAT and the suspension of excise duty on petrol and diesel imports for three months, effective 1 April 2026.
This followed a special Cabinet meeting convened by President Hakainde Hichilema to address rising economic pressures.
While the measure reduces government revenue, it provides immediate cushioning for households and businesses and slows the transmission of global shocks into domestic inflation.
These are bold, funded and structural responses. They do not eliminate the global shock but they significantly buffer their economies from its full impact.
What has Malawi done?
Malawi’s main response mechanism is the APM, which transparently passes changes in InBound Landed Costs to the pump when they move beyond a ±5% band.
Technically, this is sound: it avoids hidden subsidies and keeps the system predictable. But it has serious limitations:
It fully exposes consumers and producers to global volatility.
It offers no cushioning for farmers, transporters or lowincome households.
It does not address structural vulnerabilities like lack of strategic reserves, limited storage or narrow supply routes.
Crucially, recent national budgets have not been accompanied by clear, funded measures for strategic fuel reserves, diversified sourcing, temporary tax adjustments or targeted support for critical sectors.
While other countries are using fiscal tools, reserves, diversification and alternative energy to soften the blow, Malawi is largely relying on price adjustments and public notices.
This path has the advantage of transparency and avoids hidden fuel debts.
However, the drawbacks are significant: the country has no buffer, meaning households, farmers and businesses absorb the full impact of global shocks; costpush inflation is amplified; agriculture becomes more vulnerable; and Malawi remains without strategic resilience just one conflict, one shipping disruption or one foreignexchange squeeze away from the next crisis.
Where Malawi needs to go
The MERA notice is more than a technical document. It is a warning.
A 34–35% pump price hike is not something an agriculturedriven, lowincome economy can simply “absorb.”
The lesson from other countries is not that Malawi should copy their policies, but that it must move beyond explanation to strategy.
How much of the shock reaches the Malawian farmer, commuter, trader and manufacturer is a matter of policy choice.
Right now, Malawi is choosing exposure over protection. If fuel is the bloodstream of our agribased economy, this is a risk the country can no longer afford to take.
