Bakers have been forced to reduce the price of bread nearly two weeks after loaves of bread traded at Ksh 50 and Ksh 75.
Supermarkets and retailers recently sold bread from bakers at Ksh 55, but retained their own in-house baked bread at Ksh 50. As a result, consumers opted to purchase the in-house baked bread as opposed to the bakers' bread which saw the suppliers incur loses.
Shopkeepers within the city concurred, disclosing that customers settled for less known bread and left the renowned brands sitting on the shelves. This even forced the retailers to scale down purchases of famous brands as its demand had dropped. They lamented that they at times sold the bread at a loss before the expiry date.
"The market has forced bakers to reduce the price as customers opted for cheaper bread as an alternative," Bimal Shah, managing director of Broadway Group of Companies told the Business Daly.
That was the first time the price of the basic commodity had been increased in four years largely due to the increase in wheat prices. It was estimated that a tonne of wheat flour increased from Ksh 25,300 to Ksh 33,000 representing a 30 percent raise.
The upsurge was influenced by the rise in oil prices and the Energy and Petroleum Regulatory Authority (EPRA) review of fuel prices. Super Petrol, Diesel and Kerosene increased by Ksh 0.17 per litre, Ksh 4.57 per litre and Ksh 3.56 per litre respectively. The new fuel prices in Nairobi as of January 14, were as follows: Super Petrol Ksh 106.99, Diesel Ksh 96.40, Kerosene Ksh 87.12.
Increase in wheat prices also saw Treasury raise taxes as well as the resumption of the 16 percent Value Added Tax (VAT) which had been reduced to 14 percent by President Uhuru Kenyatta after the Covid-19 pandemic broke out in the country.
Treasury CS Ukur Yatani also introduced the Minimum Tax which affects all businesses, whether one makes a profit or not. The government started charging companies one percent of their gross turnover.
The tax is paid in installments and is due on the 20th day of each period ending on the 4th, 6th, 9th and 12th month of the year of income. The Kenya Revenue Authority (KRA) clarified that the tax is meant to foster equity and fairness in the tax system as everyone would be paying a base tax.
Milk prices also shot up, with gas expected to rise according to an announcement made by EPRA. The 500ml milk packet rose from Ksh50 to Ksh55. As for gas, EPRA noted that increased demand in the international market for liquefied petroleum gas (LPG) would lead to an increase in its cost.
The global price had increased by Ksh 2,752.5 ($25) per tonne between September and October of 2020. EPRA was set to review the cost of 13-kg cooking gas which currently retails at between Ksh2,100 and Ksh2,200,
In earlier 2020, LPG was removed from tax-exempt goods in the Finance Bill 2020 which saw households pay Ksh300 more for cooking gas. This was a turnaround from 2016, where Treasury scrapped the tax on LPG to cut costs and encourage households to leave kerosene and charcoal for cooking.
