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Soaring food, fuel prices send Kenyans to the streets

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Kenya is facing a storm over surging inflation and runaway food prices that have sparked protests in the country.

Indeed, last week the government said it had slashed taxes on petroleum products.

Finance Minister Uhuru Kenyatta announced a 20 per cent cut in excise tax on diesel and 30 per cent cut on kerosene.

The tax cuts were however dismissed by trade unionists and consumer organisations as a joke and being too little to be felt by households.

As of last week, pump prices had not been adjusted to reflect the new lower prices with Ministry of Energy officials saying they were awaiting action by the Kenya Revenue Authority which would give the effective date.

The Consumer Federation of Kenya said food prices had risen by at least 25 per cent in the past three months.

Despite the tax cuts on petroleum products, protests kicked off last week in Kenya’s major towns, a signal the ordinary sacrifices that consumers have been forced to make since late 2010 have started translating into political discontent.

Protests over soaring prices have been witnessed in Uganda and Burkina Faso and political analysts were expecting dissent to sweep the entire East African region, sending shockwaves to the ruling class who have seen upheavals topple governments in North Africa.

Governments globally have been taking measures to address soaring food and fuel prices as well as unemployment by changing taxation regimes, introducing price controls and taking in more imports to boost supplies.

Kenya, for example, introduced price caps on fuel prices in December 2010 after complains that retailers were exploiting them.

Uganda and Kenya have been particularly hard hit by inflation since the onset of the global financial crisis, a situation that has been made worse by the weakening of local currencies against the dollar and other hard currencies.

A slew of problems face EAC households but none is as pressing as high food and fuel prices, which have hit millions of poor people.

MPs accused the Energy Regulatory Commission (ERC), the body charged with regulating the energy sector and state-owned oil marketer the National Oil Corporation of failing to perform their roles effectively.

NOCK was blamed for high fuel prices in the country after it failed to deliver a consignment on time in March, increasing delivery costs after international oil prices rose while the ERC has been faulted for instituting price controls that have not had a positive impact on the lives of Kenyans.

NOCK managing director Summaya Athmani said the firm was seeking contracts with oil producing nations to cushion rising prices.

“We have been engaged in discussions with producing countries to get what we call government-to-government contracts,” said Ms Athmani adding the company was looking to increase alternative sources of fuel including biodiesel from Brazil.

Double-digit rates

Inflation in Kenya and Uganda rebounded with a vengeance in March, edging near the double-digit mark on the back of high food and fuel prices.

The Kenya National Bureau of Statistics said inflation climbed to 9.19 per cent in March — the highest since the new method of calculating price changes was introduced in November 2009 — and 2.65 percentage points higher than February’s rate of 6.64 per cent.

Meanwhile, Uganda’s year-on-year inflation rate jumped to double digits in March, driven by rising food costs.

Tanzania’s consumer price inflation rose for the fifth consecutive month in March, the National Bureau of Statistics said on Friday.

Year-on-year inflation rate rose to eight per cent in March from 7.5 per cent in February, lifted by higher food and fuel prices.

Rwanda’s All Urban consumer price index rose for the fifth straight month to 4.11 percent year-on-year in March, the National Institute of Statistics of Rwanda said.