Consumers to dig deeper into their pockets to celebrate Christmas

East Africa’s households will face hard time during the festive season as prices of goods and services continue to rise, thanks to, the high cost of food and fuel. FOTOSEARCH 

By JAMES ANYANZWA

In Summary

• East Africa’s households will face hard time during the festive season as prices of goods and services continue to rise, thanks to, the high cost of food and fuel.

East Africa’s households will face hard time during the festive season as prices of goods and services continue to rise, thanks to, the high cost of food and fuel.

Last week, global crude prices surged 17 per cent to $53.63 per barrel from $46, after the Organisation of Petroleum Exporting Countries (Opec) and Russia announced that they would cut production in 2017 to shore up market prices.

Oil prices dropped from a high of $110 per barrel in June 2014 to $30.44 per barrel in January 2016 — before gaining slightly to reach $53.63 per barrel last week.

Meanwhile, Rwanda’s overall month-on-month inflation for December will climb to 10.06 per cent, from 9.76 per cent in November.

In Kenya, the overall inflation rate for November increased to 6.68 per cent, from 6.47 per cent in October, with the surge in the cost of living attributed to increases in prices of several food items such as sugar and maize floor. For instance, a 2kg packet of maize flour is going for Ksh110 ($1.1) while a kilo of sugar costs Ksh130 ($1.3).

These two are among most consumed household commodities in the country. Last December, the same quantities of the two were retailing at Ksh95 ($0.95( and Ksh115 ($1.15) respectively.

Central Bank of Kenya Governor Patrick Njoroge said the inflation rate in the country would remain at around 6.5 per cent during the festive season, largely due to pressure on prices of vegetables, maize flour and sugar.

“We expect inflation to remain at 6.5 per cent during this festive season before easing to the government’s target of 5 per cent,” said Dr Njoroge.

READ: Kenya central bank sees inflation rising over festivities

In Uganda, inflation for the month of November rose to 4.6 per cent, from 4.1 per cent in October, according to data from the Bank of Uganda (BoU), and it is expected to remain at around 4.63 per cent in December.

Tanzania’s headline inflation for the month of November increased to 4.8 per cent from 4.5 per cent in October due to a surge in food and fuel prices, according to the Tanzania’s National Bureau of Statistics.

Some food items that contributed to the surge are vegetables, wheat flour, maize flour and sorghum.

According to the Bank of Uganda, there have been heightened inflation pressures in the country since March 2015, partly due to currency depreciation that acclerated in February 2015.

BoU forecast headline inflation stay at between 8 per cent and 10 per cent this month.

The International Monetary Fund (IMF), in its World Economic Outlook report in October, said inflation in emerging markets and developing economies would soften to 4.5 per cent this year from 4.7 per cent last year, reflecting the diminishing effects of currency depreciation

Oil prices are expected to average $41 per barrel for 2016 and $50 per barrel for 2017.

On December 2, in Vienna, Opec reached an agreement to cut oil production by 1.2 million barrels per day in order to raise global prices.

Opec is a cartel of 13 — major oil exporting countries with members Saudi Arabia, Iran and Iraq, accounting for over 30 per cent of the global oil output.

Opec nations currently produce 33.7 million barrels of oil per day, but under the deal, they will bring that down to 32.5 million barrels per day, with Saudi Arabia, Iraq, UAE, and Kuwait making the biggest cuts.

Retail prices

In Tanzania, the Energy and Water Utilities Regulatory Authority (EWURA) increased the retail and whole sale price of all petroleum products for this month.

According to Ewura retail prices of petrol, diesel and kerosene have been  increased by 1.59 per cent ($0.01 per litre) , 4.53 per cent ($0.04 per litre) and  4.08 per cent ($0.03 per litre).

In November, Rwanda increased fuel pump prices, with petrol and diesel prices increasing by Rwf122 ($0.14) and Rwf54 ($0.06) respectively.

The Rwanda Utilities Regulatory Authority set the new pump price for petrol at Rwf948 ($1.13) per litre and diesel at Rwf914 ($1.09) per litre effective November 3, 2016.