Regional inflation rates could spike in the medium term following the sustained rebound of the price of crude oil in the international market, where it has risen from a low of $29 early this year to the current $47 per barrel.
Rwanda recorded a rise in its April inflation rate to 4.6 per cent, up from 4.1 per cent a month earlier, which it blamed on rising energy and transport costs. Kenya, Tanzania and Uganda have also recorded an increase in fuel prices in the past month.
The three countries saw their inflation drop in April, with Kenya’s year-on-year inflation dropping to 5.27 per cent in April, from 6.45 per cent a month earlier.
Uganda’s inflation dropped to 5.1 per cent in April from 6.2 per cent in March, while Tanzania saw its April inflation decrease to 5.1 per cent from 5.4 per cent a month earlier.
Rwanda’s central bank (BNR) said the country’s inflation levels experienced pressure as a result of increased transport prices after the recovery in global oil prices.
Rwanda’s monthly inflation rate rose by 0.8 per cent in April, while its food prices rose by 5.6 per cent. The annual inflation rate for housing, water, electricity, gas and other fuels increased by 3.9 per cent while that for transport rose by 7.6 per cent.
Last week, Rwanda’s Ministry of Trade and Industry announced an increase in the petrol pump price from Rwf826 ($1.05) to Rwf860 ($1.09) per litre, making it the highest in the region.
“The increase is due to international oil prices, [with] crude increasing by 35 per cent between January and May,” the ministry said in a statement.
Kenya also adjusted its petroleum prices upwards last weekend with a litre of petrol now retailing at Ksh84.25 ($0.82) while diesel will retail at Ksh70.37 ($0.67) in Nairobi. The previous petrol price was Ksh80.67 ($0.78) per litre while diesel was at Ksh66.23 ($0.64). The price of kerosene also went up by Ksh3.02 ($0.03) per litre for the second month to retail at Ksh46.98 ($0.48).
The Energy Regulatory Commission (ERC) said the price of crude oil in the international market has risen, leading to an increase, early this year, of the price of diesel, kerosene and petrol.
“The impact of this change will begin to affect the local retail prices from this month,” said the ERC in a statement.
The rise in crude oil prices has seen the average cost of imported super petrol increase by 13.29 per cent from $417 per tonne in March this year to $472.9 in April, while diesel recorded an increase of 16.06 per cent from $322.76 per tonne to $374.60 per tonne.
Genghis Capital macroeconomic analyst Kevin Tuitoek said countries in the region face inflationary pressure with the rebound in oil prices.
Last week, on the sidelines of the World Economic Forum in Kigali, Kenya’s Central Bank Governor Patrick Njoroge said there was room to start loosening the tight monetary stance as inflation had started falling within the acceptable range.
Source: The East African
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