Fuel prices remained steady for the first time this year, ending months of consecutive price cuts that consumers have enjoyed since December last year.
The Energy and Petroleum Regulatory Authority (EPRA) has kept the pump prices of a litre of petrol and diesel unchanged at Sh188.84 and Sh171.60 respectively in Nairobi.
This came despite the strengthening of the shilling against the dollar, as the Bank of Egypt uses an exchange rate of 130.83 units against the dollar, compared to 129.06 units last month.
Gasoline fell 1.06 percent to $708.47 per tonne, while diesel rose 1.62 percent to $693.82 per tonne.
Kenyans have enjoyed successive cuts in fuel prices since last December, significantly easing inflationary pressures on the economy.
“During the period under review, the maximum permitted pump prices for petrol, diesel and kerosene remained unchanged,” Daniel Kiptoo, the General Manager of the Electricity Authority, said in a statement released on Wednesday evening.
The strengthening of the shilling against the dollar since February and slowing global demand for fuel since the end of last year have been major factors in the steady decline in local pump prices over the past seven months.
However, the energy regulator kept the VAT at 16 per cent as stipulated in the now-abolished Finance Act 2023.
Kiptoo said last month that Ebra was awaiting advice from the attorney general before deciding whether to reduce the VAT rate to eight per cent.
Fuel prices are a crucial factor in determining the cost of services and goods in the Kenyan economy, highlighting the importance of reducing the VAT rate to eight percent in easing the burden on Kenyans.
Inflation fell to 4.3% last month from 4.6% in June, remaining within the government’s preferred target range.
It remains to be seen how fixed prices will affect consumption, as demand has been falling since the start of the year.
Gasoline and diesel consumption fell despite lower fuel prices, suggesting that depressed consumers are cutting costs as spending power dwindles.
Petrol consumption fell 2.9 percent to 986.2 million litres in the six months to June this year from 1.01 billion litres in the same period last year, while diesel consumption fell 2.5 percent to 1.27 billion litres from 1.31 billion litres.