Kenyan households and businesses face renewed financial pressure as rising fuel prices, extreme weather predictions and political activity threaten
to drive up the cost of living in the coming months.
The latest increase in petroleum prices is
already prompting warnings from transport operators and manufacturers, raising
the prospect of higher fares, production costs and prices of essential goods.
This is coming at a time when many households
are struggling with stagnant incomes and shrinking purchasing power.
The Energy and Petroleum Regulatory Authority
(EPRA) on Wednesday raised the maximum pump prices of super petrol, diesel and
kerosene by Sh12.93, Sh9.90 and Sh28.49 per litre, respectively, for the
October 15 to November 14 pricing cycle.
A litre of super petrol in Nairobi now costs
Sh226.96, diesel Sh227.76 and kerosene Sh219.87, further squeezing motorists,
public transport operators and households that rely on kerosene for cooking and
lighting.
The increases come as global oil markets
grapple with escalating tensions in the Middle East, exposing Kenya’s
vulnerability as a net importer of refined petroleum products.
The beginning of winter in Europe and other
Western markets could add to demand for diesel and kerosene, potentially
prolonging pressure on international prices.
EPRA Director-General Edward Kinyua said
September recorded the highest fuel import costs since the Middle East crisis
began.
The average landed cost of imported super
petrol increased by 11.81 per cent, from $874.26 per cubic metre in August to
$977.55 in September, while diesel costs rose by 11.2 per cent.
“The government further reduced the value
added tax of super petrol, diesel and kerosene from 16 per cent to 8 per cent
to cushion consumers from the adverse effects of the spike in international
prices,” Kinyua said.
He added that international super petrol
prices had climbed to about $1,300 per metric tonne, from approximately $600
when the crisis began, illustrating the scale of the external shock confronting
fuel-importing economies.
“September has been the worst month ever since
this crisis broke,” Kinyua said.
The latest increase, however, threatens to
spread beyond fuel stations, with transport operators warning that they may
have little room to absorb the additional costs.
On Thursday, the Matatu Owners Association
(MOA) called on President William Ruto to intervene, warning that operators
could be forced to pass the increase on to commuters.
Association president Albert Karakacha said
the government had assured transport stakeholders during a meeting in Mombasa
that diesel prices would be protected against arbitrary increases.
“President William Ruto assured us that
diesel, which is the backbone of public transport, would be protected from
arbitrary increases. Today, diesel is up by Sh9.90 per litre. That promise has
been broken. What are we supposed to tell our members?” he said.
Karakacha said operators were already
contending with rising maintenance expenses, insurance premiums and spare-parts
prices.
He cited the cost of a tyre, which he said had
risen from Sh25,000 to between Sh38,000 and Sh45,000, while comprehensive
insurance cover had increased from Sh180,000 to Sh250,000.
Higher fares would compound the pressure on
workers who depend on public transport to reach their jobs, while operators who
maintain fares risk lower margins as fuel and maintenance expenses climb.
Manufacturers are also bracing for higher
costs, with industry players warning that production expenses could rise by
more than 10 per cent.
A member of the Kenya Association of
Manufacturers, who requested anonymity, told The Star that companies
were awaiting government intervention before deciding how to respond.
The manufacturers’ concerns reflect the wider
economic consequences of fuel inflation.
Diesel powers much of the country’s freight
and logistics network, meaning increases can raise the cost of moving
agricultural produce, construction materials and finished goods.
Industry players have also questioned the
domestic tax burden on petroleum products, arguing that taxes and levies
account for a substantial share of the pump price.
The final retail price incorporates the cost
of imported fuel, freight and insurance, distribution and storage expenses, oil
marketing margins, regulatory charges and government taxes.
The tax debate has gained urgency following
Parliament’s passage of the Tax Laws (Amendment) Bill, 2026, which seeks to
maintain VAT on petroleum products at eight per cent, half the standard rate of
16 per cent, for another 90 days, with a possible further extension.
Majority Leader Kimani Ichung’wah told MPs the
extension was necessary in the hope that the conflict in the Middle East would
end.
Finance and National Planning Committee chair Kimani Kuria said the relief had cost the government approximately Sh54 billion in forgone revenue over six months, underscoring the difficult balance between cushioning consumers and protecting public finances.
The pressure is already evident in household budgets.
James Mugwe, a bodaboda operator in Westlands,
said his earnings had deteriorated as fuel prices rose.
“Jobs have shrunk. Incomes too. The situation
is getting out of hand. I have no choice but to relocate upcountry,” he said.
Mugwe said his profit had fallen from about
Sh200 per litre of petrol to less than Sh25, making the business increasingly
difficult to sustain.
Miruam Muluka, who commutes daily from
Kitengela to Westlands for her receptionist job, is also considering quitting
because of the rising cost of travel.
“High fuel prices mean even higher transport
costs. I already operate at a loss. How can I budget my Sh25,000 salary with
all these taxes and high commuter costs?” she said.
The danger is that these pressures will
coincide with adverse climatic conditions that could disrupt food production
and distribution.
Kenya’s Meteorological Department has warned
of a likely El Niño signal towards the end of 2026, with the
October-to-December rainy season potentially bringing enhanced rainfall and
flooding in vulnerable areas.
The risks are particularly concerning given
the existing inflation burden.
The Kenya National Bureau of Statistics
reported annual inflation of 6.6 per cent in August, with food prices rising by
nine per cent and transport costs by 15.7 per cent over the year.
Housing, water, electricity, gas and other
fuels recorded inflation of 3.6 per cent.
The emerging political contest ahead of the
2027 General Election adds another layer of uncertainty.
