Fuel Prices-Kenya - Escalating fuel costs are working their way into different consumer prices pushing the inflation rate for the month of March to 9.19 per cent up from 6.54 per cent in February, official data showed yesterday. Besides recording an increase in the Housing, Water, Electricity, Gas and other fuels index, rising fuel prices also pushed up the transport index and the food and non-alcoholic beverages category contributing to an across the board rise in consumer prices.This is the fifth straight rise in consumer prices since October last year. Releasing the inflation report yesterday, the Kenya National Bureau of Statistics said the surge in inflation from the 6.54 per cent recorded in the month of February was caused by price increases in foods such as potatoes, maize, beans, sukuma wiki, maize flour, cabbages, beef and bread.

These are indirectly affected by fuel prices in addition to drought as they have to be transported to urban areas. "The transport index rose by 2.36 per cent mainly due to increase of petrol and bus/matatu fares. The prices of these went up by 4.42 and 9.20 per cent respectively between the months of February and March," the government statistician said in the report.

Electricity charges also went up as the power distributor KPLC factored in a higher fuel cost adjustment to reflect an increase in reliance on thermal power.

Last week the Monetary Police Committee of the Central Bank moved to stem inflation by raising its key lending rate from 5.75 per cent to 6.00 per cent alarmed that the effects could become permanent and damage economic growth. "We were trying to prevent any such effect," Governor Njuguna said Monday. "If see supply shocks are hitting domestic prices upwards, the best thing is to constrain money supply so that you do not ratify a higher plateau of domestic prices,"

James Mbugua

Nairobi Star/01/02/2011