Shopping for Christmas this year might ruin your holiday budget as increased taxes push commodity prices through the ceiling.
With high inflation, poor food production and increased excise duties on basic commodities such as beverage, wines, chocolates and phone calls, this Christmas season could be one on the most financially unbearable holidays you’ve ever witnessed.
Many families, including the working class, may have to do without luxuries as they balance between Christmas expenditure and survival after the holidays or run the risk of heavy burden as schools reopen on January 3.
Among the commodities that consumers will have to dig deeper in their pockets for include festive favourites, such as chapatti, which have become costlier following high international wheat prices that have disrupted local wheat prices. A tonne of wheat currently goes for Sh27,540, up from Sh22,440 in August due to shortage in supplies from Russia — one of the leading wheat exporters to the international market including Kenya.
Russia has banned exports to cushion its citizens against high prices.
Chief executive of Capwell Industries, Rajan Shah says wheat prices have been going up since August. This has seen a 15 per cent rise on cost of wheat landing in the country.
Consumer prices of wheat flour have so far shot to a high of Sh122 for a two-kilo packet from Sh112 in August.
“The cost of clearing the produce, which includes transport from Mombasa port to Nairobi has pushed the price to Sh3,200 for a 90-kilo bag from a low of Sh2,600,” he said.
In September, the government moved to raise revenue on key commodities. It also slapped an eight per cent value added tax on all petroleum products to service part of its huge debt and be in the good books of one of its major lenders, the International Monetary Fund (IMF).
Rise in fuel costs, which literally drives the country’s energy, transport and manufacturing sectors, further pushed up pump prices, cost of production and manufacturing of commodities among both small and big businesses.
Meanwhile last month’s consumer price indices released by the Kenya National Bureau of Statistics indicate that cooking gas prices continue to remain high.
LPG gas has become the preferred energy source for dozens of households in major towns due to its convenience and cleanliness.
The cost of refilling a 13-kg gas cylinder rose to a high of Sh2,193 last month, compared to 2,128 in November last year, while the cost of 50 KW\h electricity stands Sh757 compared to Sh649 for November 2017, according KNBS data.
Charcoal prices have risen faster in the past few months following a government moratorium on logging.
As consumers brace themselves for high fuel and energy prices, they will also have to contend with all-time high costs of drinks and beverages after the government increased duty on water and other non-alcoholic drinks by almost four per cent in July.
In a legal notice of July 13, the Kenya Revenue Authority increased specific duty on alcoholic products, tobacco products and motorcycles at an average rate of 5.2 per cent, which effectively increased the prices of beverages, wines and spirits, that previously had a fixed excise rate.
Those who plan to send money to their loved ones will also have to dig deeper into their pockets following an increased excise tax on mobile money transactions and calls.