TOUGHER TIMES

Rising fuel prices to push up cost of living

In Summary

• Yesterday, as a barrel of oil hit $72 in global market, a dollar up compared to $71 on Monday.

A fuel attendant at metro station. File
A fuel attendant at metro station. File

The cost of living is expected to rise further in Kenya on new monthly fuel prices that saw a litre of petrol, diesel and kerosene go up Sh5.4, Sh2.24 and Sh2.40 respectively.

In the past three months, pump prices have risen by Sh11.94 for Super petrol, Sh8.31 for diesel and Sh7.63 for kerosene.

The sustained rise in fuel prices is set to have a spiral effect on Kenya's production chain, further pushing up the cost of living.

Last month, the country’s inflation rose to a 12 month high of 6.58 per cent, signalling a 2.13 per cent jump compared to 4.35 per cent reported in March.

According to the Kenya National Bureau of Statistics (KNBS), the cost of both food and non food items raised significantly, an aspect attributed to drought condition which caused an upsurge in the cost of foodstuffs and increase in pump prices.

Increased fuel prices are likely to stir up May inflation with transport, energy and food prices expected to rise as manufactures pass the high production bill to consumers.

The inflation rate for the month of May is therefore expected to hit a high of eight per cent, way above the government target of 7.5per cent as turbulence in global oil market persists, ‘an economic think tank IECONOMICS predicts.

Jared, who drives daily from Jamhuri estate to Westlands is now considering using public transport to work.

"These prices are unbearable. I don’t think driving to work or even affording lunch is sustainable in this economy, ‘he said.

According to an economist Alfred Otwere, considering that most consumer products in Kenya are transported by road in, manufacturers and movers are likely to pass additional fuel cost to consumers, making life more difficult for Kenyans who are already pressed.

 

"This is a global problem sparked by US sanctions against Iran oil. We are witnessing a high demand low supply situation. A barrel of crude oil is rising every day,’’ Otwere said.

Yesterday, as a barrel of oil hit $72 in global market, a dollar up compared to $71 on Monday.

Early this month, US placed sanctions on Iran oil, saying the oil rich country was using its oil revenue to fund Strait of Hormuz, an Islamic terrorist organisation.

This has forced Russia, China, Turkey, India and Japan who are net importers of Iran Oil to look for new markets, tightening global demand.

The regulator has attributed the rise to increase in average landing costs with super petrol rising 11.39 per cent from $620.54 to $691.25, diesel by 2.75 per cent from $624.25 to $641.51 and kerosene by two per cent from $662.55 to $675.55.

In Nairobi, the new prices for Super Petrol, Diesel and Kerosene are now Sh112.03, Sh104.37 and Sh104.62 respectively.

In Mombasa, the new prices for Super Petrol, Diesel and Kerosene are now Sh109.51, Sh101.7 and Sh102.00 respectively.

In Kisumu, the new prices for Super Petrol, Diesel and Kerosene are now Sh113.98, Sh106.32 and Sh104.62 respectively.