Lower Fuel Prices Signal Lower Inflation Rates Ahead

By Soko Directory Team / Published November 23, 2020 | 8:44 am

The Energy and Petroleum Regulatory Authority (EPRA) announced a drop in fuel prices that will be in place for the next month, signaling a possible drop in the inflation rate that has been rising in recent months.

When fuel prices are lower, the cost of production and transport often drops, though, for years, the lower cost is rarely reflected to the consumer. It is always ironic that when the fuel prices rise, the consumer feels the pain and when they drop, he gets no benefits.

In the new announcements, petrol prices declined by 1.3 percent to 105.9 shillings per liter from 107.3 shillings per liter previously.

Diesel prices declined by 2.4 percent to 90.7 shillings per liter from 92.9 shillings per liter. Kerosene prices also declined by 2.5 percent to 81.6 shillings per liter from 83.7 shillings per liter.

According to EPRA, there was a decline in the average landed cost of imported super petrol by 4.5 percent to USD 316.6 per cubic meter in October from USD 331.7 per cubic meter in September 2020 2020.

The average landed costs for diesel decreased by 7.4 percent to USD 288.0 per cubic meter from USD 312.0 per cubic meter in September 2020.

The Landed costs for kerosene also decreased by 7.4 percent to USD 261.2 per cubic meter from USD 282.1 Per cubic meter in September 2020.

At the same time, there was a 5.2 percent decrease in the Free on Board (FOB) price of Murban crude oil lifted in October 2020 to USD 40.2 per barrel, from USD 42.4 per barrel in September 2020.

The Kenyan shilling depreciation by 0.5 percent against the dollar to close at 109.1 shillings in October 2020, from 108.6 shillings in September 2020.

“We expect a slight decline, not only in the transport and fuel index, which carries a weighting of 8.7 percent in the total consumer price index (CPI) but also on the prices of other commodities such as food prices because of a trickle-down effect due to the lower cost of transport,” said Cytonn Investments.

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