When Fuel Burns a Hole in the Wallet

Inflation is the steady rise in prices that chips away at the value of money. While its causes range from monetary policy to global shocks, its impact is most keenly felt in the cost of daily essentials — food, transport, housing, and fuel.

To monitor this, economists use the Consumer Price Basket, a collection of goods and services that reflects typical household spending. Among its components, few items are as economically revealing — or politically sensitive — as fuel.

Between 2020 and 2024, the average retail prices of Petrol (Super), Diesel, and Kerosene surged. Petrol jumped from KES 103.25 to KES 191.76 per litre, Diesel from KES 93.91 to KES 168.38, and Kerosene from KES 84.55 to KES 178.32. In percentage terms, Kerosene prices more than doubled (up 111%), while Petrol and Diesel nearly doubled, climbing 86% and 79%, respectively.

These are not just numbers — they are a reflection of how inflation is reshaping everyday life. Let's Explore this more:

Kerosene: The Poor Man’s Burden

Kerosene’s dramatic rise is particularly concerning. Often used by lower-income households for lighting and cooking, it plays a critical role in the lives of those who cannot afford alternatives like electricity or LPG. A 111% price surge over just four years is not merely a statistic — it is a tangible squeeze on the most vulnerable.

Petrol and Diesel: The Economy’s Lifeblood

Petrol and Diesel, meanwhile, power the arteries of commerce. Their price hikes ripple across the economy. Higher Diesel costs mean higher transportation fees, which, in turn, push up prices for food and consumer goods. Petrol’s rise hits households directly, especially those in suburban and rural areas where public transport is scarce.

Consider the daily commuter. A matatu ride to town that once cost KES 100 is now inching toward KES 150, or even more during peak hours or bad weather. For a worker earning the minimum wage, that extra KES 50 per day — KES 1,000 or more per month — is no small matter. It eats into food budgets, school fees, and medical expenses.

Is this why so many Kenyans say the economy doesn’t feel good, despite official growth figures? It’s a question worth asking — because when the cost of getting to work doubles, macroeconomic metrics offer little comfort. Fuel isn’t just a line on a spreadsheet. It’s the price of living.

What Lies Beneath the Surge

Multiple forces are behind these increases. Global oil markets have been volatile in the wake of the pandemic, supply shocks, and geopolitical instability — most notably the Russia-Ukraine war, which disrupted energy flows worldwide. At home, exchange rate pressures and fuel subsidy reforms have further intensified domestic prices.

The Bigger Picture

These rising fuel prices serve as a microcosm of broader inflationary pressures. While central banks may tinker with interest rates, and governments may offer targeted subsidies, the underlying reality remains: energy costs are a powerful driver of inflation and a potent symbol of economic distress.

As households adapt — driving less, switching fuels, or cutting back on other expenses — the political and economic stakes grow. Fuel, after all, is not just a commodity. It’s a cornerstone of modern life. And when its price doubles, so too does the urgency to understand and address the inflationary forces at play.