Fuel price cuts won’t translate instantly – ACEP boss explains why

The Executive Director of the Africa Centre for Energy Policy (ACEP), Ben Boakye, has cautioned that recent government interventions aimed at stabilising fuel prices are unlikely to provide immediate relief to consumers.

Speaking on the PM Express Business Edition on Joy News on Thursday, Mr Boakye made the remarks while attending the IMF Spring Meetings in Washington, D.C. He explained that although global fuel prices may begin to decline, the benefits are not instantly felt by consumers due to the complex way price adjustments move through the economy.

His comments come at a time when the government is implementing measures to cushion consumers against rising petroleum prices. These increases have largely been driven by global market shocks, including geopolitical tensions in the Middle East, which have disrupted supply chains and influenced crude oil prices on the international market.

Mr Boakye emphasised that fuel pricing operates on multiple levels, making immediate reductions in the cost of goods and services unlikely even when global prices fall. He noted that changes occur both at the international market level and within domestic pricing structures, which are influenced by previous cost conditions and existing economic pressures.

“It will always happen at two levels, on the international market price and also the past effects. Even when prices come down from $100 per barrel to say $50 or $60, you’re not going to have goods and services reduced or the impact reversed almost immediately,” he explained.

He further highlighted the role of businesses in delaying the transmission of lower fuel costs to consumers. According to him, many businesses tend to maintain existing prices in order to preserve profit margins, especially when there is uncertainty about whether the decline in fuel prices will be sustained.

“Because people always want to make a margin. They want to watch this space to see whether they can even keep the same prices,” he added.

This tendency, he explained, contributes to what economists describe as a slow “pass-through effect,” where reductions in input costs—such as fuel—take time to reflect in the prices of goods and services across the economy. As a result, the average consumer may continue to feel the impact of high costs for an extended period, even after fuel prices begin to drop.

“The pass-through effect is always slow, so that pass-through effect on the average consumer will drag for a longer period of time,” Mr Boakye stated.

Despite these concerns, he expressed cautious optimism that conditions could improve over time if global market stability is restored. He noted that a more stable international pricing environment would provide a clearer signal for policymakers and businesses to begin adjusting prices downward.

“But we’re hoping that the market situation will normalise, would stabilise as soon as possible, and that create a signal for us to look at the pass-through effect and see how we can reverse some of those impacts in the medium term,” he said.

His remarks underscore the broader economic reality that while policy interventions and global price shifts are important, their effects on everyday consumers often take time to materialise.