Government and Policy

Hike In Fuel Prices Likely To Increase Consumer Inflation

BY Lynnet Okumu · March 15, 2022 08:03 am

KEY POINTS

Since Russia is one of the world’s biggest exporters of key raw materials, from gas and crude oil to aluminum and palladium, the exclusion of supplies from the country due to sanctions has sent traders and importers into a frenzy.

KEY TAKEAWAYS

Kenyans, who are already choked by the increased food prices, now have to deal with the soaring fuel prices and a further rise to the food bills amid the crisis in eastern Europe.

The Energy Petrol and Regulatory Authority (EPRA)on Monday 14^th March 2022, announced new fuel prices that will be in place to April 15, 2022, with the price of Super Petrol and Diesel going up by 5 shillings.

This rise is attributed to the landed cost of imported Super Petrol which rose by 13.34 percent from 596.79 dollars to 676.40 dollars per cubic meter and that of Diesel which rose by 11.7 percent from 606.16 dollars to 677.31 dollars per cubic meter.

In Nairobi, a motorist will have to pay 134.72 shillings for a liter of Super Petrol, 115.60 shillings for a liter of Diesel, and 103.54 shillings for a liter of Kerosene.

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Fuel prices have remained on a record high at the pump as the country struggles to beat the continuing increase in prices of commodities majorly caused by the war between Russia and Ukraine.

According to the Central Bank of Kenya in their Weekly Bulletin dated March 11, 2022, global stocks of diesel and other middle distillates have fallen to the lowest seasonal level since 2008, when similar shortages of these transport and industrial fuels helped to propel oil prices to a record high due to the ongoing Russia-Ukraine war.

Kenyans, who are already choked by the increased food prices, now have to deal with the soaring fuel prices and a further rise to the food bills amid the crisis in eastern Europe.

According to NCBA Market Research Analysts in their Monthly Economic Report – March 2022, rising energy costs are worsening earlier effects of supply and supply chain disruptions on output prices. As reports of acute fuel shortages in some economies or factory closures due to high energy costs hit the wires, expectations of hyperinflation are beginning to build.

The effect might spill off a hike in transport prices, energy bills, and the cost of manufactured goods.

Apart from oil, the war between the two European Nations has also shaken the global wheat market which has climbed to 1,924 shillings, per bushel, up by 7.62 percent.

Considering how vital this commodity is in Kenyan households, we cannot start to imagine how that pressure could go in affecting the pocket of the ordinary Kenyan.