Erroneous power bill casts doubt on January inflation data

The credibility of inflation numbers has been thrown into doubt after statistics agency used erroneous electricity cost data to measure the cost of living measure in January.

The Kenya National Bureau of Statistics (KNBS) data indicated that inflation jumped to an 11-month high of 6.99 per cent in January based on information showing the cost of electricity had increased despite Kenya Power indicating utility costs remained unchanged from December.

The bureau based its measure on Kenya Gazette notice showing that the fuel cost charge in power bills had increased to Sh2.93 in January from Sh2.85 in December, which upped electricity bills for middle class homes.

The KNBS indicated homes that consumed 200 kilowatt hours (kWh) paid Sh3,575 in January, compared to Sh3,497 a month earlier.

But a review of electricity bills show prices remained the same in January, signalling the KNBS used erroneous power cost data to compute inflation.

“There was no change (in power bills) in January. Unless they (KNBS) used erroneous numbers,” said the Energy Regulatory Commission (ERC).

“We will issue another gazette notice to correct the error. Our letters to Kenya Power, however, have the correct numbers.” The erroneous entry in the gazette notice was signed by the ERC.

Housing, water, electricity, gas and other fuel carry an 18.30 per cent weighting in the basket of goods used to measure inflation. Without correct inflation data, governments and policymakers would fumble while crafting strategy, investors would waste money and the electorate would struggle to hold their political leaders to account. 

The error appeared in the Kenya Gazette notice of January 20 showing fuel levy at Sh2.93 a unit, suggesting the KNBS used the erroneous entry for inflation calculation. The KNBs did not respond to our phone calls and text messages.

The ERC data shows that the fuel levy, which is linked to the amount of power generated by diesel generators and injected into the national grid, was retained at Sh2.85 per unit of power consumed in January. The energy regulator adjusts the fuel levy every month alongside the forex levy which is linked to foreign currency expenses such as loan obligations incurred by Kenya Power and electricity producers.

The forex levy was down Sh0.07 to Sh0.84 per unit in the review period.

The benefits of this drop was wiped out by an equivalent rise in inflation charge in the electricity bill.

The inflation charge, which is adjusted every six months or twice per year, rose to Sh0.36 from Sh0.29, a Sh0.07 rise.