Kenyans to dig deeper into their pockets as inflation adjustment takes effect

Kenyans will now pay more for petroleum products like cooking oil, petrol, and diesel as well as imported sugar as the 6.3 per cent inflation adjustment on excise duty announced by Kenya Revenue Authority last month, starts today, October 1.

As you head to the supermarket or your nearby shop, expect to see a rise in the prices of bottled water, fruit juice, cigarettes, wine, alcoholic and non-alcoholic drinks, cosmetics, toothpaste, and imported white chocolate.

Other products whose prices will soar include motorcycles, imported SIM cards, rawhide, and skins.

As a result of the new levies, the tax on a bottle of water will increase from KSh6.6 to KSh7.02 per litre, and the tax on juice will increase from KSh13.3 to KSh14.14 for every 12 litres.

On the other hand, the tax on sugary confections will increase by KSh2.9 to KSh42.9 for every 36 kilos.

The tax for every two beer bottles or one litre of your preferred beverage will rise from KSh134 to KSh142.4, and the price for filtered cigarettes will increase from KSh3.82 to KSh4.06.

Further, KRA will increase the excise for wines demanding KSh243.4 for every 208 litres, up from KSh229 and KSh356.4 for 278 litres of spirit from KSh335.

The inflation adjustment starts at a time when the country’s inflation hit a record high of 8.5 per cent in August, attributed to high fuel and food prices amid the high cost of living.

At the same time, manufacturers estimate that Kenya will lose over 35,000 jobs and billions in taxes.

According to the Kenya Association of Manufacturers (KAM), if demand falls as a result of rising costs, industries will reduce their personnel, cancel supply agreements, and lower taxes will be submitted.

The lobby group says, sales have already decreased as a result of excise tax increases on spirits and beer in July, which have reduced sales of beer made from barley and sorghum by 21% and 32% respectively to Covid-19 pandemic levels in just a month. A further increase will cause a collapse as consumers turn to illegal alcohol, the lobby claims.

“Finished goods distribution and retail trade (dominated by MSMEs) will lose Sh4.2 billion in reduction of raw material use, Sh15.7 billion in employment income loss and 35,364 jobs will be lost,” KAM said.

The change complies with the law, which requires KRA to revise excise taxes in the 12 months leading up to June in line with inflation.

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