Zambia’s Fuel Shock: Why Pump Prices Jumped 24% and What Happens in December

The ERB’s new prices took effect at midnight on September 30, replacing the September price schedule.

Source: ERB October 2026 price announcement. Percentage changes calculated from the published prices.

For a motorist buying 50 litres of petrol, the same purchase now costs K1,573, compared with K1,264.50 in September, an additional K308.50. A 50-litre diesel purchase costs K1,663.50, up K320.50.

These examples illustrate the direct impact at the pump; the wider burden depends on how much fuel households and businesses use and whether higher costs are passed on through fares and prices.

1. International fuel prices rose

The ERB reported that its average petrol price benchmark increased from US$104.94 to US$121.58 per barrel during the review period, a rise of about 15.9%. Diesel’s benchmark rose from US$150.92 to US$160.88, or approximately 6.6%. The Board attributed the upward pressure to geopolitical tensions in the Middle East.

These are petroleum-product price benchmarks used in the ERB’s calculations, not the price of crude oil alone. They feed into the cost of imported fuel and help explain why domestic prices can rise even before taxes are considered.

2. The kwacha weakened against the dollar

The ERB said the exchange rate used in its review moved from K19.28 to K19.76 per US dollar. That represents a depreciation of about 2.5% over the stated period.

Because Zambia imports its petroleum requirements, a weaker kwacha increases the local-currency cost of paying international suppliers. The ERB’s detailed price build-up also uses an exchange-rate assumption of K20.20 per US dollar for October, compared with K19.69 in September. These are different reference rates within the pricing calculations, but both show the currency’s role in the cost of imported fuel.

3. Excise duty returned

The government suspended excise duty on petrol and diesel from April through September 2026, then reinstated it from October. The measure was introduced to cushion consumers and businesses against a sharp rise in international fuel costs.

The October pump-price schedule lists excise duty at K750 per cubic metre for petrol and K2,340 per cubic metre for diesel equivalent to K0.75 and K2.34 per litre, respectively. VAT remained at zero in the October build-up.

That means the tax change was not identical for the two fuels. Diesel carries a higher excise amount per litre in the published schedule, while the final pump price also reflects differences in wholesale costs and other pricing components.

4. September’s price-stabilisation support disappeared

This is a critical part of the story that a tax-only explanation misses.

The ERB’s September wholesale schedule included price-stabilisation support of approximately K2.12 per litre for petrol and K3.66 per litre for diesel. The October schedule lists no equivalent support.

That does not mean these figures can simply be added to the excise duty to explain the entire pump-price increase: the final price also incorporates changes in wholesale costs, fees, margins and other components. It does show, however, that consumers entered October without the same support that had lowered the September wholesale price.

Taken together, the evidence shows why the 24% rise should not be attributed to one policy decision alone. International prices, exchange rates, tax treatment and price support all affected the final calculation.

The ERB says Zambia meets its petroleum requirements through imports because the country has no proven crude-oil reserves. Its petroleum supply chain involves international procurement, transport infrastructure, terminals, distributors and retail operators. The Board uses a cost-plus pricing model to account for the costs associated with purchasing and supplying petroleum products.

This import dependence makes domestic prices sensitive to global market conditions and the cost of foreign currency. It also means that fuel-price changes can affect more than motorists: diesel is important to freight transport, mining equipment, agriculture, generators and industrial operations.

The scale of that exposure is visible in official trade statistics. The Zambia Statistics Agency’s The Statistician report says fuel import volumes rose from 0.70 million tonnes in 2021 to 2.59 million tonnes in 2025. Fuel represented 16.62% of the total import bill in 2025, worth K54.89 billion.

Higher fuel costs can spread through the economy when businesses pass on additional expenses for moving goods, operating machinery and providing services.

The Bank of Zambia had already identified this risk in its May 2026 Monetary Policy Report. It warned that reversing temporary fuel-tax relief could increase transport and distribution costs, raise firms’ production costs and put upward pressure on inflation.

The transmission is not automatic or identical across sectors. Some businesses may absorb part of the increase; others may adjust prices, reduce margins or change operating decisions. The eventual effect on consumer inflation will depend on the duration of higher fuel costs, the response of businesses and other price movements in the economy.

The policy trade-off is clear: tax relief can cushion households and firms in the short term, but it reduces the tax revenue government would otherwise collect. The ERB confirmed that the temporary measures resulted in foregone public revenue, but the sources reviewed do not provide a verified total cost for the full six-month period.

The government has announced that VAT on petroleum products will be reinstated on December 1, 2026. The October ERB price build-up still shows VAT at zero.

If the October pre-VAT prices remained unchanged and the standard 16% VAT were applied to the same price base, the arithmetic would imply roughly K5.03 more per litre of petrol and K5.32 more per litre of diesel. This is an illustrative calculation, not a forecast: international prices, the exchange rate, taxes and other pricing components may change before December’s review.

The actual adjustment will depend on the price build-up and tax treatment in force when the change takes effect.

Can longer review periods bring stability?

President Hakainde Hichilema has said Zambia is considering moving away from monthly pump-price adjustments towards reviews every two or three months. The proposal was raised during discussions with ADNOC Global Trading, which also expressed interest in longer-term supply arrangements and possible investment in fuel infrastructure.

The idea remains under consideration; it is not yet an implemented change to the pricing system.

Less frequent reviews could make budgeting easier for households and businesses, but they would not eliminate changes in global prices or the exchange rate. If costs rose between reviews, a longer interval could delay the adjustment and potentially produce a larger correction later. If costs fell, consumers might wait longer to benefit.

The policy question is therefore not only how often prices change, but how price risk is managed: whether through transparent pricing rules, supply contracts, public support or some combination of these mechanisms.

Zambia’s October fuel-price shock was the result of several forces converging: higher international petroleum prices, a weaker kwacha, the return of excise duty and the removal of September’s price-stabilisation support. VAT remained zero-rated, with its return scheduled for December 1.

The immediate challenge is managing the impact on households, transporters and businesses without obscuring the fiscal cost of relief. The longer-term challenge is reducing vulnerability to imported fuel costs and making price adjustments more predictable without simply postponing them.

December will provide the next important test. Whether the government restores VAT as planned, changes the pricing-review cycle or secures a longer-term supply arrangement, the result will matter not only at filling stations but across Zambia’s transport costs, business expenses and inflation outlook.