Brace for lean times as pump prices shoot up

By Zachary Ochuodho
Monday, February 17th, 2020
Tomato prices have shot up to Sh20 a piece after recent heavy rains destroyed the crop in Kenya and Tanzania. Photo/PD/GERALD ITHANA
In summary

Zachary Ochuodho @zachuodho

 Kenyans are staring at the possibility of increased cost of living following the upward adjustment of pump prices by Energy and Petroleum Regulatory Authority (Epra) on Friday.

The high cost of fuel is expected to have a trickle-down effect on food and other basic commodities as manufacturers and importers pass the high bill to consumers.

Analysts argue that the increased fuel cost may adversely impact on some of the critical households’ items such as tomatoes, currently retailing at Sh20 a piece, and onions that have for a while have been missing due to the bad weather conditions in the country and a reduction in supply of the same from Tanzania.

Traders say Tanzanian supplies, which Kenya mainly depends on, has dwindled in recent months.

The number of trailers plying the Nairobi-Namanga road that ferry fresh produce such as tomatoes, onions and oranges, have significantly reduced.

Heavy rains

Due to the recent heavy rains, tomato yields in Kenya and Tanzania shrunk owing to crop destruction. 

Benson Mapesa, a senior economist at Treasury, explains that the rising cost of fuel will definitely lead to the high cost of living and thereby have an adverse impact on economic growth as well.

“The sustained rise in fuel prices is set to have a spiral effect on Kenya’s production chain further pushing up the cost of living for everyone,” says Mapesa.

He admits the increased cost of fuel leads to high cost of transport, which is transferred to consumers thereby making the cost of food  costly.

He says increase in fuel costs will trigger high inflation—which will affect the cost of items sold in the market. 

Ian Kagiri, an investment analyst at Cytonn Investment Management, says that the move will lead to the general rise of prices of items.

For the next one month, consumers will pay Sh2.67 and Sh2.13 per litre of super petrol and diesel respectively.

Kenya National Bureau of Statistics (KNBS), the cost of both food and non food items rose significantly due to an upsurge in the cost of foodstuffs and increase in pump prices.

In January inflation rose to 5.78 per cent compared to 5.82 per cent registered in December, as education, alcohol and food prices shot up. KNBS said month- on-month inflation rose by 0.31 per cent from 204.77 in December 2019 to 205.4 in January.

Dry grains

The month also saw housing, water, electricity, gas and other fuels move up by 0.45 per cent. Prices of onions, spinach and carrots increased by 5.25 per cent, 4.38 per cent and 3.22 per cent.

However, prices of green grams and cooking fat dropped by 0.99 per cent and 0.36 per cent respectively.

Overall, the price index for food and non-alcoholic beverages moved by 0.39 per cent. The transport index dropped marginally during the period under review.

In Nairobi, consumers will part with Sh112.03, Sh104.37 and Sh104.62 for a litre of super petrol, diesel and kerosene respectively.

Those in Mombasa will pay Sh109.51, Sh101.7 and Sh102 for a litre of super petrol, diesel and kerosene respectively.

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