Kenyans hope ERC fuel price review will ease cost of living

Business Daily Kenya:  Kenyans will be keenly waiting for the monthly fuel prices review which will be announced by the Energy Regulatory C...

Business Daily Kenya: 

A vehicle gets fueled. Photo/File

Kenyans will be keenly waiting for the monthly fuel prices review which will be announced by the Energy Regulatory Commission (ERC) today hoping for a dip in prices amid rising cost of living.

The cost of fuel is major catalyst to changes in the cost of commodities due to its knock-on effect, particularly when the prices go up, as most manufacturers and retailers pass the burden to consumers.

Last week, Kenya National Bureau of Statistics (KNBS) estimated that the Consumer Price Index (CPI) had increased by 0.75 per cent from 186.24 in April to 187.64 in May as the overall year-on-year inflation hit 11.70 per cent in May.

The World Bank had warned in April that an expected rise in global oil prices, compared to last year’s lows, would have a dampening effect on economic activity.

Indicators are that global price of crude oil decreased slightly in April but increased in May meaning the landed price of commodities was slightly higher which might dampen prices set to be reviewed.

The regulator said increase in the average landed cost of imported oil went up by 0.94 per cent to $568.92 (Sh58,826.33) per tonne in April 2017 while the decrease in the price of diesel was a consequence of average landed cost of imported diesel decreasing by 2.20 per cent to $493.72 (Sh51,050.65) per tonne.

This led ERC to announce an increase in prices of super petrol and kerosene, while price of diesel decreased marginally. Price of super petrol increased by Sh1.59 to Sh99.59, while that of diesel decreased by Sh0.57 to Sh88.05.

Kerosene price increased by Sh0.90 to Sh65.28 per litre. Coming soon after a drought that spiked the cost of foodstuff, any increase in the cost of fuel will affect the spending power of ordinary Kenyans spiking inflation further.

However, the costs will vary depending on the distance of the point of purchase relative to the source of the products. The commodities are usually cheaper in Mombasa and prices increase as they get into the mainland.

The prices increase further from Nairobi into the hinterlands. Other factors that affect the changes include depreciation in the mean monthly dollar to Kenya shilling exchange rate which has not changed much compared to May when it reduced by 0.37 per cent from Sh102.95 per US dollar in March 2017 to Sh103.32 per US dollar in April 2017.

The post Kenyans hope ERC fuel price review will ease cost of living appeared first on Mediamax Network Limited.

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