Fuel prices increase with review being the highest since October 2014

Peter Mikisi a petrol station attendant in Nakuru fuels a car. [Photo by Kipsang Joseph/Standard]

You will pay more for fuel for the next one month after the Energy Regulatory Commission yesterday hiked fuel pump prices for the eighth straight month.

The regulator in its monthly pricing guide increased the retail prices of kerosene, super petrol, and diesel to the highest levels since October 2014.

In its monthly price capping guide, ERC increased the price of diesel by Sh2.14 a litre, super petrol (Sh1.62), and kerosene (Sh1.97).

This will see a litre of super petrol go up to Sh107.92 in Nairobi beginning today, up from Sh106.3 in January, the prices last seen towards the end of 2014.

Diesel, a critical fuel for the transportation and manufacturing industries, on the other hand, will retail at Sh96.96 a litre in the capital, up from Sh95.34 in January.

Additional burden

Kerosene will set consumers back Sh76.75 a litre.

The latest hike is expected to increase the cost of living, especially for poor households that depend on kerosene for cooking and lighting.

ERC attributed the upward price review to higher crude oil prices in the international markets.

“The changes in this month’s prices have been as a consequence of the average landed cost of imported super petrol increase of 4.10 per cent, diesel increasing by 4.33 per cent, and kerosene increasing by 4.74 per cent,” said Pavel Oimeke, the acting ERC director-general, in a statement.

The higher prices will be an additional burden to consumers, who have yet to recover from a tough 2017 that was characterised by hard economic times as a result of a prolonged electioneering period that wiped out their spending power.

ERC said crude oil prices peaked at $70 a barrel in January, setting the stage for a hike in local retail prices as the regulator uses the previous month’s crude prices to compute the current month’s prices.

At $70 a barrel, the price of oil had sustained a rally seen since mid-2017 when prices dropped to $42.  The price of oil has in February 2018 eased and is currently hovering in the region of $62 a barrel.

The retail prices will remain in place until March 14, when ERC will issue new price guides.

The spike in retail prices of fuel could see the cost of living going up, which has recently come down following the onset of the October to December short rains season.

 

Inflation stood at 4.83 per cent in January, a slight jump from 4.5 per cent in January. The increase was due to higher food prices that have started going up after a dip in November and December following the short rains. Senior officials from the National Treasury have in the recent past said they expected inflation to remain at around five per cent in 2018.

Other factors considered in determining the retail prices of fuel include the position of the Kenyans currency against the US Dollar.

The shilling was largely steady against the US Dollar in January, trading at between Sh102 and Sh103. It has in the recent past posted gains against the dollar, rising to its highest in close to two years at Sh100.7 on Tuesday this week, a level last seen in 2016.