Fuel costs push April inflation to 5.6 per cent amid tax cuts to cushion consumers

Kenya’s inflation rose sharply to 5.6 per cent in April, reversing a three-month stability streak, as higher global fuel prices filtered through the economy.

This came despite government intervention to cushion consumers, which saw the state cut VAT on fuel.

Data released alongside the 2026 Economic Survey shows inflation climbed from 4.4 per cent in March and 4.3 per cent in February, driven largely by increased petroleum costs linked to geopolitical tensions in the Middle East.

The surge marks a notable shift from the relatively stable price environment seen earlier in the year, with the National Treasury warning that inflationary pressure could persist into May.

CS John Mbadi attributed the spike to rising landing costs of petroleum products, which have pushed up transport and production expenses across multiple sectors, triggering broader price increases.

“Fuel inflation has already started feeding into the economy and reducing household purchasing power,” said Mbadi.

To mitigate the impact, the government cut Value Added Tax (VAT) on petroleum products from 16 per cent to 8 per cent and tapped the fuel stabilisation fund, spending Sh6.2 billion in April to cushion pump prices.

Mbadi said the intervention prevented a steeper rise in fuel prices that would have significantly worsened inflation.

“If we did not intervene, fuel prices would have gone much higher,” he said.

The Treasury acknowledged that while deeper tax cuts or increased subsidies could further suppress prices, such measures would strain public finances at a time when revenue remains tight, and debt servicing costs are high.