Cheaper Gas, Heavier Basket: The Fragile Balance of Purchasing Power

Cheaper gas brings relief to drivers, but the unchanged diesel price and rising dairy costs temper its impact on household purchasing power.

Since November 3, 2025, gas prices in Mauritius have decreased by Rs 2.75 per liter. This adjustment, announced by the Petroleum Pricing Committee (PPC), follows global oil price fluctuations from August to October 2025 and forecasts for November to January 2026. The new reference price for gas is now set at $681.72 per metric ton, based on an exchange rate of Rs 46.43 per dollar. In contrast, diesel prices remain unchanged.

While the government welcomes this reduction, reactions from economists and consumers vary. The question of purchasing power remains central to the discussion.

Commerce Minister Michael Sik Yuen views this decrease as a "concrete gesture" for households. He noted in an interview that the Rs 2.75 reduction per liter could lead to significant savings for drivers. "A driver doesn’t just consume one liter but several tens," he reminded. The savings from a full tank of 40 to 50 liters amount to just over Rs 100, based on his estimates. In a context of rising living costs, he asserts that this reduction is "not insignificant."

Economist Randhir Mannick takes a more nuanced view, arguing that the 4.5% reduction in pump prices is modest relative to global market trends. "Oil prices have dropped by 23.5% since January 2025, and the dollar has depreciated by 3.7%. This amounts to a total decrease of about 27%. In comparison, the local reduction is minor," he explains.

He also points out that diesel, vital for transporting goods and thus for economic activity, has not decreased in price. In his view, adjusting the diesel price would have had a more pronounced effect on the national economy and on production and distribution costs.

Economist Manisha Dookhony believes that the decrease in gas prices could provide slight relief to households with gasoline vehicles. "With an average consumption of 20 liters per week, one could save about Rs 250 a month. This isn’t a huge amount, but in a context where prices rarely drop, it’s a favorable change," she states.

She adds that this decrease could indirectly influence other expenses, especially by stabilizing the cost of certain goods and services. "Oil prices also affect shipping costs. If logistics costs continue to decrease, it could reflect on the prices of some imported products," she clarifies. However, she notes that the unchanged diesel price limits the positive impact on transportation costs and, consequently, on retail prices.

The latest data from Statistics Mauritius shows that the Consumer Price Index (CPI) remained stable at 107.9 in October 2025. The annual inflation rate is at 4.1%, compared to 3.4% a year earlier. Over 12 months, the average inflation rate is 3.5%, slightly lower than the 3.7% recorded during the previous period.

Randhir Mannick interprets these figures as a gradual erosion of purchasing power. He explains, "An annual inflation rate of 4.1% means that the prices of goods and services have increased by the same proportion. It is the cost of living that suffers, especially for low-income households."

He believes that the decrease in gas prices mainly benefits households with private vehicles, often in higher income brackets. "The impact on the middle class and the most vulnerable households remains limited, as it is the generalized increases, especially in basic products, that burden their budgets the most," he specifies.

This gas price reduction comes at a time when several dairy products are seeing another price increase. Starting November 8, prices for certain brands like Yoplait and Candia will rise by up to Rs 13. Powdered milks, such as Green Meadow, Cowland, and Promex, will also become more expensive.

These adjustments weigh on household expenses, which are already affected by high food costs. Manisha Dookhony notes that "some locally made dairy products have seen significant price increases." She encourages monitoring the price gaps between local and imported products. "The decrease in freight costs doesn’t always reflect on the shelves. Retailer margins or adjustment times also play a role," she emphasizes.

In summary, while the decrease in gas prices offers financial relief for drivers and may slightly ease budget pressures for households, the continued rise in certain essential goods and the unchanged diesel price diminish the overall effect of this measure across the population. The Rs 2.75 reduction serves as a positive signal, yet it is insufficient to reverse the overall trend of weakened purchasing power. If global oil prices continue to fall and the exchange rate remains favorable, the PPC may have room for further adjustments. However, for now, the relief remains partial and depends on future inflation trends and the costs of essential goods in the coming months.