Implementation of VAT on petroleum products drove up the cost of living with the rate of inflation increasing 166 basis points to 5.7 percent this month.

Among notable price increases this month was kerosene whose cost rose 27.2 percent, Irish potatoes, PSV fares and sugar.

The government imposed a 16 percent VAT on petroleum products early this month and what followed was a public outcry and an increase in the cost of transport.

Though the VAT was later lowered to 8 percent, the damage had already been done. Kerosene was the most affected commodity after the government slapped consumers with 18 shillings per liter in an anti-adulteration levy.

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Coupled with the 8 percent VAT, Kerosene pump price surpassed that of diesel. This has been well captured in the monthly consumer price indices by the Kenya National Bureau of Statistics.

The levy on petroleum products has seen the rate of inflation hit an 11-month high of 5.7 percent. Month-on-month average cost of a liter of Kerosene rose 27.2 percent to 109 shillings and 25 cents.

The cost of a liter of super petrol rose 2.6 percent while diesel was up 5.1 percent. The impact of this was an increase in the cost of transport with the Kenya National Bureau of Statistics indicating that matatus increased fares by at least 7.9 percent while long distance bus service hiked fares by 6.7 percent.


Other notable price increments were that of charcoal which rose 2.6 percent perhaps due to the ban on logging activities.

The cost of foodstuffs was mixed. There were price reductions for maize, carrots, maize flour and tomatoes but the decreases were not big enough to offset increases in the cost of Irish potatoes, sugar, sukuma wiki, cabbages and wheat flour which saw the food and non-alcoholic drinks index increase by 0.37 percent.

The Kenya Bureau of Statistics says the year on year food inflation increased from negative 1.15 percent in August 2018 to a positive 0.5 percent this month.


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