Transportation costs skyrocketed by a quarter last month despite lower fuel inflation following state intervention to stop rising pump prices.
With fuel prices at a 10-year high, the Energy and Petroleum Regulatory Authority (Epra) refrained from an increase in the price of the pump for diesel despite an increase in the cost of delivery, instead of maintain a lower margin for oil traders of Sh11.72 per liter. diesel instead of the normal Sh12.36.
The price of diesel has a great impact on the cost of goods and personal budgets, since it is the common fuel for public transport vehicles and freight carriers.
NCBA #ticker analyst: NCBA said in a note that the reduction in fuel inflation from 14.8 percent in April to 14.4 percent in May reflected the slow rise in fuel prices as a result of the measures. temporary, but runs the risk of increasing. even more so if global prices continued to rise.
“This reflected a slower rise in pump prices in the period. Even then, price pressures could remain in double digits due to low base effects and the potential rise in global oil prices as demand increases, ”NCBA analysts said.
“This can put upward pressure on transportation costs. In May, matatu / bus fares increased 25.4 percent. “
Overall, inflation remained subdued, rising slightly to 5.87 percent in May from 5.76 percent in April due to lower fuel prices and slow demand.
This was despite an increase in food inflation from 6.4 percent to seven percent, due to the higher cost of cooking oil, beef and cabbage, but analysts expect the increase to be contained by weather conditions. favorable conditions that will guarantee an ample supply of fruits and vegetables.
“The risk of inflation accelerating beyond the upper 7.5 percent target remains highly unlikely,” the NCBA said.