GOVERNMENT has decided to subsidise consumers in March by keeping the fuel price unchanged even though it under-recovered on the commodity last month.

The good news was confirmed by Mines and Energy Permanent Secretary Joseph Iita on Friday, meaning that 93 lead replacement petrol (LRP) will remain N$7,11 a litre at Walvis Bay, 95 unleaded petrol N$7,20 a litre and diesel N$7,14 a litre.

Prices at all other destinations will also remain the same as in February.

The breather comes after the Ministry hiked the price of 95 octane unleaded petrol by 20 cents per litre last month, while the price of 93 octane lead replacement petrol rose by 17 cents per litre and diesel by 7,0 cents a litre.

Iita said "oil market fundamentals have been somewhat at odds with the behaviour of the oil price over the last month, thus the Ministry has decided to subsidise the current under-recoveries experienced in the local market".

An under-recovery means that the basic fuel price, based on the daily product price and exchange rate, is more than the basic fuel price used when the Ministry of Mines and Energy (MME) decided on pump prices at the beginning of February.

More good news is that the annual inflation rate has remained at a two-year low for a second month in a row.

Figures released by the Central Bureau of Statistics (CBS) on Friday show that, like in January, annual inflation remained at 6,3 per cent in February. The last time the country had such a low rate, was in March 2007.

Iita, however, warned consumers that the fuel price relief might be short-lived.

"At present the world is faced by a demand-driven, supply-constrained system in the fuel market. The crude fuel prices are being determined and driven by expectations of continuing economic growth driving the demand for fuels (in China), coupled with fears of future supply disruption due to geopolitics in an environment of low surplus capacity.

"Thus, consumers are forewarned that crude oil prices will remain volatile hence, necessary precaution and due diligence need to be exercised in reviewing fuel prices to avoid negative effects to the economy during periods of heavy price shocks," he said.