The fall in pump prices following this month's review by the Energy Regulatory Commission will come as a relief for motorists and is likely to have a positive effect on different sectors of the economy, particularly transport and manufacturing.
It is significant that the cost of diesel, which is mainly used in the transport sector and by manufacturers to power machinery, is at its lowest in a year.
The cost of super petrol too has reduced by a similar margin. This should translate into a reduction in the cost of doing business in the short term.
Kenyans now legitimately expect that the reduced burden of fuel costs will translate to a reduction in fares as well as in the cost of goods. Yet, many a time, the sector players are quick to raise prices when fuel costs go up, but are reluctant to pass on the benefits when the reverse happens. Ideally, cheaper fuel should signal a reduction in the cost of living. Passing on the benefit of the low fuel prices would have a knock-on effect, spurring more spending by consumers and eventually growing the economy.
In contrast, the high inflation caused by higher prices erodes the purchasing power and is unhelpful for everyone. More than that, the Energy Regulatory Commission should ensure that prices at the pump locally are in tandem with global prices.
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Note: The results are not exact but very close to the actual.
