Prices on the rise: From oil to milk, inflation hits family budgets

The cost of living is rapidly spiralling out of control as soaring prices of many household items and other essentials have strained family budgets and could push millions to the tipping point.

Skyrocketing petrol prices have over the past week had an effect on fares and perishable goods, while the cost of cooking oil has dramatically risen in a matter of months, leaving many homes with tough choices to make.

The Covid-19 pandemic disrupted the production and supply of palm oil from source markets leading to scarce supply locally, with the recent war in Ukraine making the situation worse by cutting off supply of alternative vegetable oils such as sunflower and soybeans. 

Data from the Kenya National Bureau of Statistics (KNBS) shows the price of cooking oil has shot up 35 per cent over the past year, with a litre now retailing at Sh332, up from Sh245 in the same month last year. There’s also a shortage of milk in the country, with some shops restricting customers to just a few packets.

Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga told the Nation the milk shortage is due to the biting drought that has been witnessed in most parts of the country in recent months.

The drought, coupled with the rising cost of animal feeds, has reduced milk production due to scarcity of pasture.

In Nyandarua County, which is the second largest milk producer after Kiambu, retail outlets have increased milk prices by about Sh10 to between Sh60 and Sh63 per packet.

“This is attributed to drought, as well as the ever-increasing prices of animal feeds. The drought has led to depressed supplies from farmers, and consequently, reduced production by manufacturers,” said Ms Wakiaga.

The milk shortage comes in the middle of a fuel crisis that has hit parts of the country after delays by the government in releasing subsidy funds owed to oil marketing companies.

Petroleum Principal Secretary Andrew Kamau said the state had disbursed part of the arrears amounting to Sh8.2 billion to the oil companies on Monday, which he said would end the crisis.

However, an oil marketer who spoke to the Nation said it could take long before the arrears hit the accounts of the fuel suppliers, indicating that the shortage could drag on a little longer.

“The money is paid to the oil importers who then release it to fuel suppliers so it could take a while. The money paid is that which we were owed between January and February so the situation has not been fully solved,” said the executive.

The price of cement has also significantly gone up with some shops having nearly doubled the price of a bag, which has hit the construction sector hard. Trade Cabinet Secretary Betty Maina said cement shortage is caused by delays in getting clinker into the country due to disruption in global supply chains.

“Generally, commodity prices have increased across the global market and clinker, the main raw material in the production of cement, has not been spared. Additionally, the disruption of the global supply chain has resulted in delays in the delivery of materials at the Port of Mombasa,” she said.

The CS said two cement producers are increasing their clinker capacity to reduce cement shortages in the long-term, with two manufacturers also considering boosting their capacities.

“The Ministry is hopeful that domestic production will cushion the country against future external shocks,” she said.

The construction sector has also been hit by a shortage of steel, which is a key material in the construction industry.

Ms Maina said the ban on scrap metal in January has significantly contributed to the shortage and high cost of steel as well as delays in delivery of raw materials for reinforcing steel into the country.

She said the government has developed rules to govern the trade, adding that 30 per cent of the identified large dealers have applied for licenses.

“The moratorium of scrap metal has impacted the production of steel products in the country. Reason being, 50 per cent of raw materials used in the manufacture of hot-rolled products are from scrap metal,” said the CS.

KAM has urged the government to lower the cost of farm inputs and animal feeds to address perennial shortages of foods such as milk as well as lowering the cost of the food products.

“We urge the government to reduce the cost of production of milk by subsidising the cost of animal feeds. We also encourage farmers to adopt new methods of farming to enable them increase their output, by embracing new technologies in dairy production,” said Ms Wakiaga.

The lobby also wants the government to scrap the Railways Development Levy (RDL) and Import Declaration Fee (IDF) charged on imports in order to lower the cost of goods.

The tow levies are charged at 1.5 per cent and 2 per cent respectively on goods imported into the country.

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