Kenyans should expect up to 7pc increase in prices of food and consumer goods following the latest fuel hike by the energy regulator, analysis by the country’s chamber of commerce show.
The Kenya Chamber of Commerce and Industry (KNCCI) has warned that the increase in pump prices announced by the Energy and Petroleum Regulatory Authority (EPRA) on Wednesday will have negative effects on the cost of living, cost of production, and erode Kenyan businesses competitiveness across the region.
EPRA announced an increase of Ksh 16.65 on a litre of super petrol and Ksh 46.29 on a litre of diesel while kerosene remained unchanged leading to an uproar among consumers.
“The sharp rise in diesel is particularly concerning because diesel is the backbone of transport, agriculture, manufacturing, logistics, construction, and general trade. Any increase in diesel prices quickly feeds into the cost of moving goods, producing essential commodities, and delivering services across the economy,” said Dr Erick Rutto, President KNCCI.
Following the hike, the price of super petrol and diesel have now risen to Ksh 214.25 and Ksh 242.92 per litre respectively in Nairobi.
According to analysis by the chamber transport and logistics costs are projected to rise by between 10pc and 20pc while manufacturing and farm distribution costs will rise by between5pc and 12pc.
“The current fuel increase is not just an energy issue; it is an economy-wide shock. KNCCI urges Government to move with urgency to cushion households, protect businesses, and reduce domestic cost drivers that amplify global fuel shocks,” said Rutto.
In a bid to cushion consumers from adverse price hikes, the government has reduced VAT on petroleum products from 16pc to 8pc while at the same time sourced Ksh 5 billion from the Petroleum Development Levy Fund to stabilize prices.
This comes as Energy and Petroleum Cabinet Secretary Opiyo Wandayi assured of continued fuel supply under government-to-government deal amid disruption in global supply chain.
“We should all remain vigilant against possible profit-driven exploitative practices during this period of uncertainty, ensuring that consumers are not placed at any further disadvantage,” he said.
However, KNCCI has called for review and rationalize fuel taxes and levies, especially on diesel, reduce port, storage, transport, and distribution inefficiencies, publish a clear fuel price build-up in every review cycle and provide targeted relief for fuel-intensive small businesses.
The chamber says since January this year, price of petrol has increased by 17.4pc, while that of diesel has increased by 42.5pc.
KNCCI also noted that while global crude oil prices rose by about 6.8pc between April and May, local diesel price rose by 23.5pc owing to taxes, levies, landed product costs, exchange rate effects and margins which continue to amplify the impact on businesses and households.
With the latest fuel hike, Kenya’s overall inflation rate is also expected to increase further after rising to 5.6pc last month from 4.4pc recorded in March.
The post KNCCI projects food prices to rise by up to 7pc after fuel hike appeared first on KBC Digital.