Fuel prices will remain unchanged for July across Kenya’s major cities after a KSH 16.67 billion fuel subsidy.
Petrol will now be sold at KSh159.12 per litre, kerosene at KSh127.9 per litre, and diesel at KSh140.
“It is notified that His Excellency the President has Thursday authorized an additional fuel subsidy of KSh16.675 billion to cushion Kenyans from further fuel prices.
“This will see diesel continue to retail at Sh140 per litre, petrol at Sh159.12 and kerosene at KSh127.94. Without such state interventions, the pump prices would have jumped to a historic KSh193.64 for diesel, KSh209.95 for petrol and KSh181.13 for kerosene,” said the Energy and Petroleum Regulatory Authority (Epra).
Cytonn Investments analysts state that fuel is a major contributor to Kenya’s headline inflation, and its prices are a major input cost in the manufacturing, transport, and energy sectors.
Global fuel prices have recorded a 45.2% increase since the beginning of the year to USD 123.7 per barrel as of 16th May 2022, from USD 85.2 per barrel recorded on 3rd January 2022, driven by persistent supply chain constraints worsened by the geopolitical pressures occasioned by the Russian invasion of Ukraine.
These are the highest prices witnessed globally since 15th March 2012, when prices reached USD 124.3 per barrel. Kenyans have been largely cushioned from the high prices by the fuel subsidy program under the National Treasury.
“However, we have maintained that the programme is unsustainable and will be depleted should the average landed fuel costs continue to rise,” the experts noted.
Rising commodity prices (up 13.8%) and record fuel costs (up 9.0%) pushed the cost of living in June to a five-year high of 7.90%, 40bps above the central bank statutory target of 7.50%. Inflation was also driven by rising costs in household maintenance (up 9.2%) and transport (up 7.1%).
“Similarly, food prices are unlikely to abate, driven by prolonged supply disruptions in food supply chains, domestic weather shocks, high input costs, and rising transportation costs. Against this backdrop, we are pricing in a 100bps rate hike by the central bank to the year-end to contain the secondary effects of inflation. This
is higher than our 75bps estimated earlier,” NCBA July Economic Report.