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3 January 2011
Prices of cooking gas, and kerosene are expected to maintain an upward surge, owing to increased demand in international markets, squeezing household budgets of middle and low income families.
US crude oil prices touched a 26-month high of $90.76 a barrel on December 7 driven by higher demand in Western countries that are currently experiencing the harsh winter season and weakness of the dollar.
Prices have since traded in a range just below $90 a barrel.
The price of a 13 kilogram cylinder of liquefied petroleum (LPG) gas cylinder has increased by up to 44 per cent to Sh2,600 from Sh1,800 in October, while kerosene prices have risen by approximately 30 per cent to an average of Sh75 per litre
"The increase in prices for kerosene and gas comes from the increase in crude oil prices but the problem of piracy is also a factor as most of it is either imported or processed from imported products," said George Wachira an energy industry analyst.
Insurance companies have increased premiums on ships that transport crude into the country owing to rising cases of piracy, increasing shipping costs for crude oil.
Weakening of the shilling to the dollar which saw the exchange rate pegged at about Sh80 for most of 2010 compared to about Sh75 in 2009 also raised oil prices.
Charcoal prices have increased to between Sh1,000 and Sh800 per sack from Sh600 last year according to data by the Kenya National Bureau of Statistics (KNBS), further limiting alternative fuel options for households.
The Kenya Forestry Service passed new rules that are meant to regulate the charcoal industry while making it legal for traders who organize themselves into associations to produce, transport and trade in charcoal.
This has exerted pressure on charcoal prices, as it has limited supply options for traders.
According to the KNBS, the overall rate of inflation edged up 0.67 per cent to 4.51 per cent from 3.84 per cent while the housing, water, electricity, gas and other fuels index went up by 0.85 per cent between the months of November and December.
The cost of cooking gas, kerosene and charcoal went up by an average of 5.4, 6.7 and 3.1 per cent respectively.