Will petrol, diesel prices fall for three-straight month?

After months of steep descent, retail fuel prices in Kenya are highly expected to continue heading south with hopes high as Energy Regulatory Commission (ERC) releases this month’s price review.

Petrol and diesel prices across major cities have dropped significantly for the last two months on the back of softening global crude prices. And now that momentum is expected to carry on for the third-straight month.

Prices of petroleum products dropped considerably in the first month of the year, with the sliding fuel prices seen to have lifted the country’s economy and consumption weeks later despite being the toughest period of the year for many households.

The substantial decline in fuel prices witnessed in mid-December last year, came despite the introduction of 8 per cent Value Added Tax (VAT), it is widely anticipated that the trend will sustain in the coming weeks, perhaps months owing to the now stable shilling against major world currencies, which has strengthened in the last days.

Fuel prices rose sharply in the last quarter of 2018 even before the eight percent VAT law on petroleum products was triggered – a worrying trend that had sparked fears among many households still finding it hard to put decent meals on the table with prices of basic commodities at the time at all-time high.

The price of Super petrol in October last year for instance, jumped by Sh3.37 a litre while that of diesel also went up by Sh1.85 as well as kerosene which also increased by Sh1.82. The cost of petrol in the September review, however, reduced by Sh2.21 compared to diesel and kerosene prices which rose marginally by Sh0.39 and Sh0.29 respectively during that period.

Last month motorists paid Sh9.33 for super petrol, Sh10.04 for diesel and Sh3.52 for kerosene in the previous price reviews ERC. The regulator could chose to slightly tweak last month’s figures judging by recent adjustments in the petroleum prices.  

Motorists in Nairobi paid Sh104.21 for a litre of petrol, down by Sh9.33 from Sh113.54 they had been paying since December 14 when the two reviews were done, with the cost of a litre of diesel at the time retailing at Sh102.24. Kerosene sold at Sh101.70 in the city during the period.

Consumers in Mombasa will paid Sh101.60 for super petrol and Sh99.63 and Sh 99.09 for diesel and kerosene respectively, while the commodity in Kisumu will be sold at Sh 105.73 for super petrol and Sh103.94 and Sh103.40 for diesel and kerosene correspondingly.

Should that happen, then consumers will have a few shillings to spend on other goods and services in the coming weeks before another review is done. Prices of groceries could also ease depending on whether retailers and producers will decide to pass on the benefits to consumers should those adjustments make economic sense on their profit margins.

Consumer staples are directly affected by rising or plummeting costs in fuel products because petroleum products, for instance are regularly used in the transportation and switching on generators and greased machines, and when such rises or dip occur, cost implications are either enjoyed by majority of consumers or severely felt by most of them.