In Kenya, fuel costs drop for the second month in a row
In Kenya, fuel costs drop for the second month in a row
In Kenya, few factors resonate as profoundly with the daily lives of citizens as the cost of living. The intricate web of prices, regulations, and market dynamics continually shapes the financial well-being of individuals and businesses alike.
In the latest move, the Energy and Petroleum Regulatory Authority (EPRA) slashed the prices of petrol, diesel, and kerosene, offering reprieve for motorists, businesses, and transporters. EPRA cut the prices of diesel and petrol by Kes5 per litre.
Additionally, kerosene, a vital energy source for many households, saw a substantial decline of Kes4.82 per litre. A litre of petrol will now retail at Kes207.36, diesel at Kes196.47, and kerosene at Kes194.23 in Nairobi. The new prices will be in force until Valentine's Day, February 14.
“The price of diesel has been cross-subsidized with that of super petrol. Oil marketing companies (OMCs) will be compensated for the under-recovery of costs from the Petroleum Development Levy (PDL) fund,” EPRA Director-General Daniel Kiptoo said. He added that pump prices are expected to keep decreasing in the foreseeable future.
The World Bank, in its latest update for the region, noted that "an escalation of the conflict in the Middle East could exacerbate food insecurity in Sub-Saharan Africa, as a conflict-induced sustained oil price spike would not only raise food prices by increasing production and transportation costs but could also disrupt supply chains."
Read also: Global oil surge and IMF clean energy agenda fuels Kenya’s inflation
Inflation
In October last year, fuel prices hit a historic high when a liter of petrol, diesel, and kerosene retailed at Kes217.36, Kes205.47, and Kes205.06 per liter in the capital.
The inclusion of 16 percent Value Added Tax (VAT) in the prices of fuel, in line with the provisions of the Finance Act 2023, the Tax Laws (Amendment) Act 2020, and the revised rates for Excise duty adjusted for inflation as per Legal Notice No. 194 of 2020, has been partly driving up the cost of fuel.
Since then, the price of fuel has been steadily coming down. However, a declining value of the shilling has denied motorists the chance to enjoy a substantial cut in pump prices.
In the latest evaluation, EPRA based its pricing on an exchange rate of Kes158.81 to the US dollar, reflecting a decline of ten units in the local currency since the preceding review.
Concurrently, Kenya experienced a modest deceleration in inflation, recording a 6.6 percent year-on-year rate in December, a slight decrease from the 6.8 percent reported in November.
Data from the Kenya National Bureau of Statistics highlighted that major contributors to the country's year-on-year inflation included the sectors of transport, housing and utilities, and food.
