For the first time ever, after fuel prices remaining unchanged for the fourth consecutive month, prices shoot up in the latest review by Kenya’s Energy and Petroleum Regulatory Authority.
Effective October 14, 2021, a litre super petrol will retail at KSh7.58, KSh7.94 for a litre of diesel, and KSh12.97 for kerosene.
Consequently, Super Petrol, Diesel, and Kerosene will retail at KSh134.72, KSh115.60, and KSh110.82 per litre respectively in Nairobi.
The impact is felt as a result of the state not drawing from its fuel price stabilization fund established in June by the National Treasury. The Ksh 1.4 billion fund was used to compensate oil marketers as payments for haircuts taken to cushion Kenyans from higher fuel prices.
“However, we believe that the stabilization was unsustainable given that the treasury had to compensate the Oil Marketing Companies, a certain amount of what was lost following the subsidy,” Analysts from Cytonn Investments disclosed.
This is compared to the last review where petrol retailed at KSh127.14 per litre in Nairobi, diesel at KSh107.66, and kerosene at cost KSh97.85 per litre.
The authority said that the average landed cost of imported Super Petrol decreased by 0.72 per cent from 552.35 US Dollars per cubic meter in July to 548.36 US Dollars per cubic meter in August.
Diesel decreased 4.81 per cent from 514.25 US Dollars per cubic meter to 489.51 per cubic meter while Kerosene increased by 0.96 per cent from 493.45 US Dollars per cubic meter to 498.19 US Dollars per cubic meter.
Prices are inclusive of the 8 per cent Value Added Tax (VAT) in line with the provisions of the Finance Act 2018, the Tax Laws (Amendment) Act 2020, and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020.
On the flip side, headline inflation is projected to increase in the month. In August, it accelerated to 6.57 per cent from 6.55 per cent a month earlier attributed to higher food and fuel prices.
“Looking ahead, while the inflation is showing signs of a potential peak, a weaker exchange rate and persistently high global commodity prices may present some risks. Even so, a persistent slack in credit markets and weak household consumption should strap inflation well within the target band of 2.50 per cent – 7.50 per cent,” according to NCBA Research.
“This should provide the central bank with confidence to sustain the pro-growth policy stance, However, pressure on the exchange rate, current ample liquidity may favour maintenance of status quo – the central bank rate (CBR)at 7.00 per cent the remainder of this year.”