(Victoria Rubadiri) The move by the Energy Regulatory Commission (ERC) to increase fuel prices recently set consumers off balance, after two consecutive months of reprieve.
With inflation rates easing to 6.09 percent last month and the Central Banks cut in its key lending rate to 13 percent, the ERC’s move has been criticized as retrogressive.
“The ERC should have worked with the Treasury to absorb some of the recent fuel adjustments since they will erode the gains already made on inflation. They will result in higher electricity and with it a resultant increase in transport and food prices,” Consumers Federation of Kenya (COFEK) Secretary General Stephen Mutoro said.
In the regulator’s latest fuel price review Super petrol in Nairobi went up by Sh2.47 to sell at 108.95, diesel by Sh3.99 to retail at Sh101.07 and kerosene to retail at Sh79.65 after going up by Sh5.68.
The ERC attributed the increase in fuel costs to an upward trend in the price of crude and refined petroleum products in the international market over the last three months.
Razia Khan the Regional Head of Research for Africa at Standard Chartered Bank says Kenya needs to be cognizant about its heavy dependence on oil imports and the pressure it is putting on the widening Current Account Deficit (CAD).
Late last year the local unit plummeted to a low of Sh107, based largely on the pressure from the CAD, a scenario Khan says the country cannot afford to repeat as it will impact inflation and hence food prices.
Cofek currently has a case in court seeking to compel the government to stabilize and reduce high fuel prices.
The lobby group took the ERC and several oil marketers to court over high fuel costs which have negatively affected inflation and the cost of living, with another hearing set on 31st October.