Inflation Rate For August To Spike With Higher Fuel Prices

The inflation rate for the month of August is likely to rise after the Energy and Petroleum Regulatory Authority (EPRA) increased the price of Super Petrol, Diesel and Kerosene.

The increase in fuel prices, especially Diesel often has an impact along the value chain from the transport sector to the manufacturing sector, hence increasing the price of basic commodities as manufacturers transfer the cost to the consumer.

We expect the increase to not only affect the transport index, which carries a weighting of 8.7 percent in the total consumer price index (CPI) but also have a ripple effect on the prices of other commodity baskets such as food & alcohol prices due to the higher transport costs.

We also expect pressures to be experienced in the housing, water, electricity, gas, and other fuels index given the 27.8% increase in the price of kerosene. Said Cytonn Investments.  

Petrol prices have increased by 3.5 percent to 104.0 shillings per liter from 100.5 shillings per liter previously, while diesel prices have increased by 3.0 percent to 94.6 shillings per liter from 91.9 shillings per liter.

Kerosene prices also increased by 27.8 percent to 83.7 shillings per liter from 65.5 shillings per liter, previously,

The increase in prices was attributed to an increase in the average landing cost of imported super petrol by 14.2 percent to USD 319.2 per cubic meter in July 2020 from USD 279.6 per cubic meter in June 2020.

The landing costs for diesel increased by 10.3 percent to USD 333.3 per cubic meter in July 2020, from USD 302.2 per cubic meter in June 2020.

The was a 127.9 percent increase in the landing costs for Kerosene to USD 288.0 in July 2020, from USD 126.4 per cubic meter in June 2020.

There was also a 21.9 percent increase in Free on Board (FOB) price of Murban crude oil lifted in July 2020 to USD 44.3 per barrel, from USD 36.3 per barrel in June 2020.

The Kenyan shilling depreciated by 0.9 percent against the dollar to close at 107.5 shillings in July 2020, from 106.5 shillings in June 2020.

READ: Pain At The Pump As Fuel Prices Spike, Kerosene Up By Ksh 18