Fuel, Beer Prices Set to Go up Again More pain For Kenyans

Less than two weeks since pump prices of fuel hit a historic high, causing a countrywide uproar, consumers in Kenya are facing yet another increase on at least 31 products.

This comes with the adjustment of the excise duty rate by the Kenya Revenue Authority (KRA), a move that will force manufacturers and importers to pass costs to consumers.

In a notice issued on August 10, Kenya Revenue Authority (KRA) Commissioner-General said the taxman would adjust the rate of excise duty using 4.97 per cent, as the average inflation rate covering the 2020/21 financial year.

As a result of the upcoming increases, consumers will pay Sh5.77 more for a litre of beer while prices for spirits will rise by up to Sh13.20.

A litre of petrol will rise by Sh1.09, while diesel and kerosene will increase by Sh0.566 per litre each.

The price of a packet of 20 cigarettes will increase by Sh3.20 in line with the rise in excise tax from Sh66.20 to Sh69.40, while the duty on bottled water will rise from Sh3.31 to Sh3.47 per litre.

This will force players such as the East African Breweries Limited (EABL), BAT and other local manufacturers to adjust their pricing upwards to remain profitable.

It will come barely three months after the beer manufacturer increased prices of its beer and spirits prices between Sh5 and Sh20.

Since the introduction of the Excise Duty Act in December of 2015, beer excise has increased from Sh100 per litre to Sh116 per litre (16% increase), wine from Sh150 per litre to Sh198.34 per litre (32% increase) and spirits from Sh175 per litre to Sh 265.50 (52% increase).

These changes in alcohol taxes came off the back of a massive 43 per cent excise tax increase that was effected in 2015, with Kenya having the highest tax regime compared to neighbouring countries where products have remained cheaper.

Uganda and Tanzania, for instance, have maintained excise duty increases at nine per cent, 11 per cent and 15 per cent for beer, wines and spirits respectively on average within the same period.

The two countries have three and five times fewer excise rates than in Kenya for beer respectively.

“The inflation adjustment will certainly have an impact since this tax in the upcoming adjustment has to be passed on to consumers of alcoholic beverages over time,” EABL replied to an inquiry by the Star, on the impending price increase.

The company however said it has not arrived at a decision yet but will decide once the intended adjustment by the government has been effected.

Over the last few years, affordability challenges facing cigarette consumers have heightened, impacting demand for tobacco products, BAT notes, with consumer pockets being stretched due to adverse impacts of Covid- on disposable income.