Cooking gas prices heated to an all-time high of KSh3,231.84 for the 13-kilogramme cylinder in March, defying State-backed efforts to lower the cost of the fuel, including scrapping of the eight percent value-added tax.
Fresh data from the Kenya National Bureau of Statistics (KNBS) shows the average prices of the commodity continued on an upward trend during the month after they rose 1.4% from the KSh3,187.10 recorded in February, which translated into a 3% year-on-year jump.
The new average dwarfs the high of KSh3,218 recorded in June 2022 when disruptions arising from the Russia-Ukraine conflict that was sparked earlier in February of the same year, started hitting global economies.
A spot check showed that some retail outlets were selling at highs of KSh3,330 on Monday while the re-filling cost in some went below the national average to as low as KSh3,090.
According to analysts, the surge in prices is an aftermath of the falling shilling’s value, which hit record lows at the start of the year when marketers were purchasing the cargo that is currently in the market.
“I believe this is a direct effect of the forex rates that were applicable between January and February when the cargo was booked and purchased to cover demand for quarter one,” observes Martin Chomba, chairman of the Petroleum Outlets Association of Kenya.
“LPG prices in international markets were also quite high due to demand in the winter period and the Russia situation where they are no longer supplying to some of their traditional markets. I foresee prices coming down in quarters two and three as we move into summer periods and the sustained strengthening of the shilling against the dollar.”
Last year, the National Treasury through the Finance Act of 2023 removed the 8% VAT on LPG in a bid to lower prices, but the recent rise has seen the costs surpass the levels that prevailed before the relief was introduced.
Shortly after the bill was enacted, the cost of the commodity fell from an average of KSh3,069 in June 2023 to KSh2,787 in July, in the process handing consumers a major relief.
A Cabinet sitting would, thereafter, in October propose the scrapping of all taxes on LPG in a bid to make the clean fuel affordable to most homes, including low-income ones, in a bid to cut reliance on kerosene, charcoal, and firewood which have adverse effects on the habitat and health.
The relief was, however, short-lived as prices started to rally thereafter courtesy of the free fall of the Kenyan shilling against world majors bloating the cost of importing commodities such as cooking gas and fuel.
