No Merry as Fuel Prices Set to Push Up Transportation Cost, Inflation

The increase in fuel prices since August of this year is having a substantial impact on transportation costs and the consumer market in Kenya and is likely to further boost inflationary expectations in December.

Kenya’s Energy Regulatory Commission (ERC) on Wednesday set the maximum retail prices for diesel, petrol and kerosene for the December to January 14 next year.

Diesel in Nairobi will retail at Ksh 94.94 from Ksh 94.20 previously, Petrol at Ksh 94.20 from Ksh94.94 and Kerosene at Ksh 63.56 from Ksh 62.16.

“The changes in this month’s prices have been as a consequence of the average landed cost of imported super petrol decreasing by 2.76 percent from US$ 518.23 per ton in October 2016 to US$ 50.93 per ton in November 2016; diesel increasing by 9.80 percent from US$ 435.46 per ton to US$ 478.11 per ton and kerosene increasing by 4.41 percent from US$ 479.30 per ton to US$ 500.45 per ton,” read a statement from the ERC.

The Prices will come into effect from December 15.

The consumer price indexes (CPI) transport component the Transport Index increased by 0.37 per cent in October 2016 compared to September 2016 mainly on account of increases in the pump prices of petrol according to the Kenyan National Bureau of Statistics (KNBS).

On the other hand, consumer prices in Kenya increased 6.34 percent year-on-The annual inflation rate in Kenya rising to 6.5 percent in October of 2016, from 6.3 percent in a month earlier.

November inflation stands at 6.68 percent from 6.47 per cent.

With the latest price review, it is projected that it will have a significant impact on the cost of transportation which will gradually spread to the rest of the economy because lots of goods need to be transported to end consumers.

Read:

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Further being a festive season, travelers going to the rural areas will greatly be affected as prices will soar.

However, the Central bank of Kenya said this was a good indicator of the demand pressures that are there during a media briefing on monetary policy committee.

“It looks like the inflation will remain at that level and will not drop quickly in November. In December, it might ease little more because of the excise tax that was implemented last year. On the whole inflation, it will remain currently where it is and ease towards 5 percent,” projected Dr. Patrick Njoroge the CBK Governor.