Some retailers are also said to have failed to correct shelve prices despite an adjustment on wholesale and manufacturers’ prices.
The benchmark futures for crude palm oil have fallen by about 47.5 per cent, from $1980 (Sh236,808) per metric tonne in March this year, to $1,040 (Sh124,384) this week.
This is on the account of continued rising Indonesian domestic and export capacities.
Crude palm prices hit a peak of $2,100 (Sh251,160 ) per metric tonne in June due to a global shortage.
This was after the Covid-19 pandemic heavily affected Indonesia and Malaysia, the two biggest producers of crude palm oil, crippling harvesting and milling activities.
The Russia-Ukraine war also adversely impacted exporters, with shipping lines increasing freight charges by 10 per cent in response to the rising cost of fuel and logistics disruptions.
Despite the correction in global crude palm prices manufacturers say their import costs are still high, albeit a price reduction in the local market.
The dollar scarcity reported in May this year also continues to affect importers who say they are buying the US currency at an average Sh126 per dollar, almost seven units above yesterday’s Central Bank of Kenya mean of 119.5.
“If you compare the price drop on crude palm versus the dollar, it is still expensive to import,” an official at Kenya Association of Manufacturers(KAM) told the Star yesterday.
Nevertheless, manufacturers have adjusted prices offered to retailers and wholesalers downwards.
According to KAM, the price of a 20 litre container of cooking oil has dropped to between Sh4,500 and Sh5,000, from Sh5,600–Sh6,000 two months ago.
A spot check by the Star yesterday however showed some retailers are selling the same at prices of up to ShSh7,000.
A five litre of cooking oil is averaging Sh1,700, three litres at Sh1,200 while a litre is going for an average Sh400.
Joseph Kinyua, a small retail store operator in Nairobi said: “We haven’t reduced our prices because we are still buying at the same rates from wholesalers and our suppliers.”
Naivas Supermarkets chief commercial officer Willy Kimani said shelve prices are pegged on recommended retail price by manufacturers, who are yet to advise otherwise.
However, he notes there has been a slight drop on the prices which has been passed to consumers.
“We are waiting for their new price list and once we get it, we will adjust accordingly. Nobody wants to have overpriced goods on their shelves,” Kimani, who is also a director at the Retail Traders Association of Kenya (RETRAK), told the Star.
RETRAK chief executive Wambui Mbarire said the retail sector does not control manufacturing prices.
"Prices are determined by suppliers not supermarkets," she told the Star yesterday.
KAM defended local industries saying the prices are subject to prevailing costs of raw materials, transport and logistics among other factors which affect the cost of production.
It had however projected cooking oil prices would drop from this week after manufacturers sell out old stocks, which were expected to be out of warehouses by August 10.
In June, the Consumer Federation of Kenya (Cofek) accused manufacturers and retailers of exploiting consumers on commodities prices.
According to Cofek, retailers were unilaterally increasing prices of basic goods, taking advantage of the elections, inflation and the Russian-Ukraine war.
Most affected, according to Cofek Secretary general Stephen Mutoro were Fast Moving Consumer Goods (FMCGs), like maize and wheat flour, sugar, cooking oil and tissue paper.
It said this was an abuse of abuse of buyer power between manufacturers and supermarkets and called on the Competition Authority of Kenya (CAK) to restore order in the retail sector.
WATCH: The biggest news in African Business
