CBK Survey Shows high fuel and electricity Taxes Unviable ; Reduced Purchasing power.
- Kenyans pay at least nine levies on petroleum products at the pump, and the doubling of Value Added Tax (VAT) from 8% to 16% saw the cost of the commodity rise to the highest level
- The Kenya National Bureau of Statistics (KNBS) indicated inflation rose to 6.8% in September, with electricity costs increasing by 39.5%
- CBK’s chief executives (CEOs) and market perceptions survey noted that the increased cost of the commodities would lead to reduced demand for goods and services
The Central Bank of Kenya (CBK) has revealed that high fuel and electricity prices hurt household budgets, reducing purchasing power.
Kenyans pay at least nine levies on petroleum products at the pump, and with the doubling of Value Added Tax (VAT) from 8% to 16%, the cost of the commodity rose to the highest level in history, surpassing the KSh 200 mark.
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On the other hand, Data from the Kenya National Bureau of Statistics (KNBS) indicated inflation rose to 6.8% in September, with electricity costs increasing by 39.5%.
What did the CBK survey reveal?
The CBK’s chief executives (CEOs) and market perceptions survey noted Kenyans were concerned over the increased fuel and electricity costs.
According to the report, CEOs noted that the increased cost of the commodities would lead to reduced demand for goods and services and a reduction in the workforce.
“Respondents’ concerns included higher fuel and electricity prices, reduced purchasing power affecting demand for products and the possible negative effects of the El-Nino weather phenomenon,” CBK stated.
What items recorded increased costs?
KNBS indicated the prices of Irish potatoes, cabbages, and sukuma wiki rose by 26.1%, 10.1% and 4.7%, respectively.
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Pump prices increased by 36.6% for a litre of kerosene, 21.6% for diesel and 17.9% for petrol.
“The rise in annual inflation was mainly due to an increase in prices of commodities ranging from food, non-food, fuel and non-fuel,” read KNBS report in part.
When do govt expect inflation to ease?
Kenya’s inflation is expected to drop to the CBK target range of 5% before the end of the year.
This is according to a Parliamentary Budget Office (PBO) study, which noted the primary causes of inflation in 2022 were the weakening of the shilling and unfavourable weather conditions.
The survey indicated that tighter monetary policy, including raising the Central Bank Rate (CBR) to 10.5%, increased government asset interest rates and eased inflationary pressures