Goods still highly priced despite reduced fuel costs

The international price of crude oil has dropped from US$98.05 a barrel in September to around US$45 currently, but Kenyans will still have to pay high prices for oil-related products like washing powder, detergent and fertiliser at least through the end of the year.

When oil prices were at all-time high, manufacturers hiked prices of essential goods citing the increased cost of inputs, power and transport. But, while the cost of oil has been on a downward trend, those of food and essential products have been on an upward swing.

Manufacturers now say any meaningful reduction in prices will only be felt in January, because the fuel oil used to generate electricity is purchased in two-month stocks.

This, they say, means that the electricity they are using is being generated with fuel reserves bought when the price was still high. The government has since directed that fuel should be purchased in three-month stocks.

According to Ms Betty Maina, the chairperson of the Kenya Association of Manufacturers (KAM), Kenyans can only expect a reprieve in terms of reduced consumer prices starting in January since that is when new stocks of fuel oil to generate electricity will come in.

In the midst of this confusion, parliamentarians have threatened to reintroduce government price controls on essential items.

But this is not good enough for Julius Okoth, a 35-year-old father of three who lives in Githurai in Nairobi. Mr Okoth has had to forgo several “luxuries” ever since the prices of essential goods went through the roof.

“I no longer take bread,” said Mr Okoth, who depends on odd jobs to make ends meet. “Milk is another item I have done away with altogether. In most cases I do not take tea, as there is no money to buy sugar.”

His children, the youngest of whom is eight months old, have to take porridge without sugar in the morning and at lunch.

“Porridge is the cheapest meal I can afford for my children,” he said. Grownups have to do without lunch most days.

In the evening, ugali (maize meal) and sukuma wiki (kale) are permanent features on the table. And they have to be prepared before dusk as the little paraffin in the lamp has to be stretched to last a few more days.

“You can see in all our meals maize meal plays a big role. And that is the reason why we are very angry when the price of maize meal gets out of our reach,” Mr Okoth said.

He speaks for many ordinary Kenyans when he says that nothing short of a drastic reduction on prices of essential commodities will satisfy him.

However, Mr Vimal Shah, the CEO of Bidco Oil Company, said the prices of some of their products have already been reduced by 10 to 15 per cent.

“These include bar soaps and cooking oils. Our prices will come even further down in January next year, as our costs of production will have reduced significantly,” he said.

Calls to Unilever Limited, makers of products like Omo, were unsuccessful as no one was willing to talk to Sunday Nation.

The Kenya Network of Grassroots Organisations (Kengo) and Mars Group Kenya had planned to hold protests Friday about high food prices, during the Jamhuri Day celebrations at Nyayo Stadium, but their efforts were thwarted by security personnel who arrested their leaders.

Wangui Mbatia, the Kengo executive director, said despite the arrests, they actually succeeded in putting their message across.