Fuel prices in Kenya continue to drop attributed to lower crude costs in December according to the Energy Regulatory Commission (ERC) who revised down the cost per litre of petrol and diesel by Ksh 9.33, and KSh10.04 respectively.
“The changes in this month’s prices have been as a consequence of the average landed cost of imported super petrol decreasing by 14.87% from $694.18 per ton in November 2018 to $590.92 per ton in December,” ERC Director General Pavel Oimeke said in a statement.
This was attributed to the 12.50% m/m decline in the selling price of Abu Dhabi National Oil Company (ADNOC) Murban to USD 59.50 per barrel in December while the Ksh appreciated 0.27% m/m to 102.16 in the same month.
“We estimate the net effect will be a reduction in fuel inflation from 13.80% y/y in December to c.10.00% y/y this month,” said Genghis Capital Analysts.
Inflation is projected to average 5.4% in 2019, within the government target range of 2.5% – 7.5% with inflationary pressure gradually picking up, due to the base effect and the uptick in international oil prices.
“The immediate effect on transport and subsequently on general commodity prices should see inflation drop below 5.0% in the first quarter of 2019,” according to Faith Atiti and Stephanie Kimani, CBA Analysts.
“ Global oil prices tumbled in December following heightened concerns that slower global growth would undermine demand and therefore prices of the commodity.”
“We also expect the effects of the 8.0% VAT on petroleum products as well as other tax policy measures introduced in a bid to raise revenue in line with the government’s efforts of fiscal consolidation to continue being felt in 2019, especially in the first half of the year,” says Cytonn Investments.
“Inflationary pressure is, however, expected to be mitigated by the continued decline in food prices following favorable weather conditions, as well as lower energy prices due to the recent downward revision in electricity tariffs.”