24-10-05 Transport costs in Myanmar skyrocketed after the junta raised the official price of fuel eight-fold, sending commuters scrambling onto decaying trains for cheaper rides.
In a shock move that stoked fears of massive inflation, official fuel prices soared from 180 kyat (about 14 US cents) per gallon for petrol and 160 for diesel to 1,500 kyat ($ 1.20). Passing on much of the price hike to the public, bus operators immediately quadrupled their fares, and taxi drivers doubled their rates, while only Yangon's decades-old inter-city train charged the same.

Myanmar's economy has been reeling under decades of mismanagement by the military, and EU and US sanctions tightened since the detention of opposition leader Aung San Suu Kyi in May 2003 have bitten hard.
Zaw Oo, a Myanmar political economist at American University in Washington, said that Myanmar is especially vulnerable to rising world prices because the junta buys diesel on spot markets, without committing to long-term contracts.
"Since Myanmar is a net importer of diesel fuel, the increased oil price has further eroded Myanmar's balance of payment positions, drawing its currency to the lowest ebb," he said. "Weak fundamentals account for high inflation, and the economy is structurally so weak that the inflationary pressures are expected to rise further."

Inflation now has the people of Myanmar, also known as Burma, deeply worried. The knock-on effect of the steeply higher oil prices on public transport was immediate. So far, buses had charged about 20 kyat (less than two US cents) for a ride. Now they charge four times as much. Only train fares have held steady at 10 kyat, making the aging carriages suddenly seem like a great deal.
"The number of passengers has really gone up since bus fares have increased," said one government staffer waiting at Yangon railway station.

The train service only has 14 cars running on two lines, but numbers have jumped from an average of 70,000 passengers a day in September to 90,000 a daynow. But commuters now worry train fares will go up too.
"We heard that the train fees will also be increased because the official petrol price went up," one passenger said. "We have to wait and see."

The price rise also hit hard the minority of Myanmar people who own cars. Since fuel is a tightly rationed commodity in Myanmar, with each car allowed only two gallons a day, most drivers had relied on the thriving black market where prices have already been rising steeply for two months.
That cushioned the actual impact of the official price increase, since most people were already paying more anyway.

But since the official increase, police have begun cracking down on the illegal fuel trade, sending black market prices even higher. Diesel has been selling at 4,000 kyat ($ 3.20) a gallon, up about 67 % since August, while petrol went for 3,000 kyat ($ 2.40), up 58 %.
Inflation broadly has soared this year, and especially since late August. The kyat has lost about half its value against the dollar.

Businesses now worry about the consequences of rising transport costs.
"Some of my company's employees came to see me this morning at the office to complain about the increasing bus fees," said one businessman. "So I promised them that I will consider increasing their salaries," he said. "I do not want to lose my staff.”
"Now I also worry that commodity prices will grow higher because of the increased transportation charges."