Kenyans are bracing for tougher economic times following a sharp increase in fuel prices, even as President William Ruto’s administration announced fresh measures aimed at cushioning households.
The government has released Sh6.5 billion in fuel subsidies and reduced Value Added Tax (VAT) on fuel by half, in a move intended to ease the burden on consumers.
However, the relief measures come against the backdrop of a steep rise in pump prices, with diesel increasing by Sh40 per litre and petrol by Sh28.
The adjustments are expected to trigger a ripple effect across key sectors of the economy, raising the cost of living for millions of households already grappling with shrinking incomes.
Manufacturers have warned that the surge in fuel costs will significantly raise production expenses due to higher transport and electricity charges.
Industry players say the increased costs will inevitably be passed on to consumers through higher prices of goods, further squeezing household budgets.
The public transport sector has already reacted. Matatu operators have announced a 25 percent increase in fares, while taxi associations are also adjusting their charges upward.
The move is set to hit daily commuters hard, particularly in urban areas where transport costs form a significant portion of household spending.
Freight and logistics companies are also adjusting their pricing. The Kenya Transporters Association has directed its members to increase cargo transport charges by 14 percent.
This is expected to push up the cost of goods across the supply chain, affecting traders and ultimately consumers.
Food prices are also projected to rise sharply. Millers have indicated that unga prices could increase by up to 15 percent, with overall food costs expected to climb by at least 20 percent by the end of the month.
This development is likely to deepen food insecurity concerns among low-income households.
Employers, on the other hand, have warned of potential job losses if demand drops due to higher consumer prices.
Businesses may be forced to scale down production, a move that could result in layoffs and reduced economic activity.
Meanwhile, opposition leaders have criticised the government’s handling of the fuel crisis, calling for sweeping tax relief measures and the immediate termination of the government-to-government oil import deal.
They have accused powerful individuals of profiteering from the arrangement and warned of nationwide protests if their demands are not addressed.
As the situation unfolds, the rising fuel costs are expected to remain a central economic and political issue, with far-reaching implications for households and businesses across the country.