Diesel and kerosene prices increase as petrol slows down

The price of kerosene and diesel continued to rise, defying government efforts to stabilise prices by waiving duty on the twin commodities, adding fresh impetus to the sky high inflation or cost of living measure.

Under the monthly guidelines released yesterday by the Energy Regulatory Commission (ERC), paraffin will retail at Sh88.96 per litre up from Sh86.16 per litre and diesel will rise to Sh108.97 per litre from Sh115.4.

Petrol prices slowed down to Sh116.71, increasing by 1.28 a litre compared to Sh3.12 in the June review that saw diesel prices drop by 18 cents.

ERC blamed the instability in the prices of both products on the marginal rise in crude oil and the recent weakening of the Kenya shilling against the dollar and it forecast that the reduced international prices could lower pimp prices in September

“Prices of petrol in Nairobi increases by Sh1.28, that of Kerosene by Sh2.80 while that of diesel increases by Sh2.86,” said Mr Kaburu Mwirichia, the director general at the ERC.

“Any decreases in the procurement costs realised during the month of August will be passed on to consumers in the next price review,” added Mr Mwirichia.

The increase in the local pump price defied the falling international prices—where growing gloom about the economy has pushed down oil cost and an array of other commodities—due to the weak shilling against the dollar.

The latest review was based on an exchange rate of Sh90.25 to the dollar compared to Sh89.02 in June, but the shilling has dropped to record lows of Sh94—which could erase the gains of cheaper international prices at the next review.

The rise in Kerosene and diesel prices look set to hurt the poor most since they use the twin commodities for cooking and public transport respectively despite government attempts to cushion this segment of the population from expensive basic commodities.

In the June national Budget, Treasury zero rated kerosene by 30 per cent, while excise duty on diesel was slashed by 20 per cent to cushion poor Kenyans from effects of imported oil- based inflation.

in oil products’ price will further fuel inflation beyond July’s average of 15.53 per cent.

But the poor have been hardest hit by inflation since their inflation rate stood at 16 per cent with that of the middle class and top earners at 10.15 per cent and 11.67 per cent respectively.

A rise in petroleum prices usually pushes up the cost of transport and ultimately the cost of goods and services renewing inflationary pressure in the entire economy.

There is also concern that the continued surge in oil prices at a time when Kenya remains heavily reliant on thermal sources of power will further increase the cost of electricity, which has risen by about 40 per cent since the start of the year, causing an uproar over its impact on cost of production and the competitiveness of the country’s goods.