IMF taxes push up fuel and food inflation
Price of foodstuffs, consumer goods and home utilities shot up to a 17 month-high on increased taxes and supply chain shortages for edible oils.
The overall year on year inflation rate as measured by the Consumer Price Index (CPI) was 6.44 per cent in July, this year.
This was the highest rate of inflation since February 2020 when it hit 7.1 per cent.
Since January this year, the Treasury piqued by the International Monetary Fund and the World Bank has removed VAT, pay-as-you-earn (PAYE) exemptions introduced last year and resumed corporate tax charge to 30 per cent from 25 per cent.
Kenya has also introduced a digital services tax, minimum income tax payable by all companies at one per cent of the gross turnover, excise duty hikes on call and data, loan fees, reinstatement of VAT on Liquefied Petroleum Gas.
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The Information and Communication Index increased by 1.81 per cent, mainly as a result of an increase in price of mobile phone airtime, which went up by 2.40 per cent between June and July.
Tax on LPG saw a 15.4 per cent jump in prices that pushed up the cost of home cooking.
This came as increase in global palm oil prices was unfolding on the back of production cuts in South East Asia over adverse Covid-19 lockdowns.
The retail price of cooking oil in the country has increased by a quarter for a 20-litre container since January on the back of a rally inedible oils cost globally.
“The Housing, Water, Electricity, Gas and Other Fuels’ Index, increased by 1.34 per cent between June 2021 and July 2021. This was mainly attributed to increase in prices of cooking gas, which went up by 15.43 per cent,” said Macdonald Obudho, KNBS Director General.
Kerosene, petrol, diesel prices all went up on higher global prices that have resulted at pain at the pump and on transport and logistics.
In addition, electricity prices went up by 0.76 per cent and 1.06 per cent for 200 Kilowatts and 50 Kilowatts, respectively.
Matatu and bus fares went up 7.6 per cent on average pushing up the cost of delivering people and products to market.
The prices of salad and cabbages increased by 2.45 per cent, however, the prices of tomatoes, white bread and oranges decreased by 4.12, 2.79 and 1.81 per cent, respectively.
