COST OF LIVING

High fuel prices drive September inflation to a near 2-year high

High global prices which hit $80 per barrel for the first time in three years on Tuesday could further push up the cost of living

In Summary
  • September inflation rose to 6.91 per cent compared to 6.57 per cent in August.
  • Kenya last recorded such high monthly inflation in February last year when it hit 7.17 per cent

 

A display of tomatoes at Kangemi Market
A display of tomatoes at Kangemi Market
Image: MERCY MUMO

The sharp rise in the cost of fuel affected other basic household needs,  pushing the cost of living in September to an almost two-year high.

Monthly Kenya National Bureau of Statistics (KNBS) data shows inflation rose to 6.91 per cent compared to 6.57 per cent in August.

Kenya last recorded such high monthly inflation in February last year when it hit 7.17 per cent due to high food prices especially shortage of vegetables.

According to KNBS, the September climb was mainly driven by a rise in the price of food and non-alcoholic beverages (10.63 per cent); transport (9.21 per cent); and housing, water, electricity, gas and other fuels (6.08 per cent) between September 2020 and September 2021  

The weight of fuel and electricity on the food basket more than doubled to 14.61 per cent compared to 6.08 per cent same period last year.   

In the latest price review by the Energy and Regulatory Authority (EPRA) the retail prices for a litre of petrol, diesel and kerosene increased by Sh7.58, Sh7.94 and Sh12.97, respectively.

A litre of petrol in Nairobi is now retailing at Sh134.72, Sh115.60 for diesel and kerosene Sh110.82.

The Finance Act 2021 saw the return of VAT on Liquified Petroleum Gas (LPG) and a five per cent increase in a host of excise duties, mostly touching on communication. 

The Consumer Price Index (CPI) increased by 0.32 per cent from an index of 115.710 in August 2021 to 116.077 in September 2021.

The month-to-month Food and Non-Alcoholic Drinks Index increased by 0.11 per cent during the period under review, a move mainly attributed to an increase in prices of some food items, which outweighed the decrease in prices of others.

The housing, water, electricity, gas and Other fuels’ index, increased by 0.91 per cent between August 2021 and September 2021. This is attributed to increase in prices of kerosene, electricity and gas.

Even so, there was a slight decrease in house rent during the same period.

Transport Index increased by 1.17 per cent mainly due to increased petrol and diesel prices that went up by 5.91 per cent and 7.30 per cent, respectively.

This saw  fares of city public service vehicles increase by 0.64 per cent.

However there was a rise in the supply of vegetables due to the ongoing rainfall season, especially in Rift Valley and the Western part of the country this eased the impact of the fuel cost. 

Last month, a kilo of tomatoes retailed at Sh99.50 down from Sh101.84 in August while that of kale (sukumawiki)  dropped slightly to Sh56.46. A kilo of spinach was selling at an average of Sh65.49 compared to Sh66.03 the previous month. 

The price of sugar sifted flour, beef and onions however rose.

The cost of living has maintained an upward trend since April when it was recorded at 5.76 per cent. Inflation was at 5.87 in May and progressed to 6.32 in June. 

Economists are warning households of tougher times due to a rise in global fuel prices that hit $80 per barrel for the first time in three years on Tuesday. 

Other factors include the weakening shilling that is likely to see traders pass high import bills to consumers, erratic rainfall patterns and rising political temperature in the country ahead of next year's general elections.