Here are our views on the news making headlines today for Kenya:
Fuel prices have increased to the highest level this year as the weakening shilling against the US dollar wiped out the benefits of lower global crude prices. The Energy Regulatory Commission (ERC) on Tuesday raised super petrol prices in Nairobi by Sh1.31 to Sh98.59 per litre and diesel by Sh1.25 to Sh84.56 a litre.
Our View: This may lead to increased inflationary pressure in the near term above the CBK’s 7.5% target level. Despite international price of Murban crude oil coming down, the country will still experience higher prices of fuel prices as the shilling continues to weaken against the dollar. The CBK’s next MPC meeting is scheduled for August 5th, 12015 where we might see a further increase on the central bank rate (CBR).