BY JOAN WANJIKU,NAIROBI,14TH JUNE,2022-The cost of all three petroleum products is set to rise by Ksh.9 a litre effective from midnight Wednesday in the latest maximum price review by EPRA.
The further increase in fuel prices by the Energy and Petroleum Regulatory Authority (EPRA) is attributable to an increase in the landed cost of fuel imports in the month of May.
The average landed cost of petrol for instance rose by 5.96 per cent from May while the landed cost of diesel and kerosene was up by 10.9 per cent with only kerosene spared having seen a drop of 0.34 per cent to landed costs.
The upward revision in the cost of all three fuel products sends the cost of super petrol in the Capital Nairobi to Ksh.159.12 per litre with diesel and kerosene costing Ksh.140 and Ksh.127.94 respectively.
The higher fuel prices in the next pricing cycle that starts June 15 to July 14 is despite the utilisation of the fuel price stabalization mechanism, commonly known as the fuel subsidy.
The subsidy is set to cover Ksh.25.56 for super petrol consumers, Ksh.48.19 for diesel and Ksh.42.43 for kerosene.
Without the utilisation of the cover, petrol would cost Ksh.184.68 per litre while diesel and kerosene prices would stand at Ksh.188.19 and Ksh.170.37 per litre.
Besides the higher landed cost, the prices of fuel products have been impacted by a near one per cent slip in the mean monthly Kenya Shilling to US dollar exchange rate with the local unit averaging Ksh.116.89 in May.
The higher fuel products are expected to pack more pressure on consumer prices with the consumer price(s) index (CPI) or rate of inflation standing at 7.1 per cent at the end of May, a more than two year high according to data from the Kenya National Bureau of Statistics (KNBS).
The rate of inflation now threatens to break the government’s upper limit of 7.5 per cent when KNBS publishes the CPI index again on June 30.
The trend of higher fuel and food prices forced the Central Bank of Kenya (CBK) Monetary Policy Committee’s (MPC) hand in raising benchmark lending rates by 50 basis points to 7.5 per cent at the end of last month as an inflation containment measure.
The higher Central Bank Rate (CBR) signals higher interest rates and is targeted at partially muting demand even as most of the inflationary pressures emerge externally.