Central Bank of Kenya (CBK) Governor Kamau Thugge has projected a drop in electricity prices following the recent strengthening of the Shilling.
Speaking during the Monetary Policy Committee (MPC) meeting on Thursday, March 4, Thugge explained that electricity prices usually factor in the exchange rate.
He added that the recent drop in the exchange rate would therefore see Kenyans enjoy cheaper electricity prices going forward.
"When the shilling appreciates we should expect to see the electricity prices come down," he stated.
On the other hand, he added that the appreciation of the shilling would also have an impact on the fuel prices which are reviewed monthly by the Energy Petroleum and Regulatory Authority (EPRA).
Thugge noted that the expectation was for the pump prices to drop. However, he also acknowledged that global fuel prices have risen recently.
Nonetheless, he asserted that the gains made by the Shilling would mitigate any potential increase. Global fuel prices have been increasing owing to the current limited supply in the market amidst increasing demand.
Therefore, if the pump prices do not reduce they will likely remain at the current prices.
"We should see that upward trend (global prices) mitigated by the appreciation of the exchange rate alongside the decline in import inflation.
"The appreciation of the shilling will see a positive impact on inflation going forward," he stated.
Currently, Super Petrol, Diesel and Kerosene are retailing at Ksh199.15, Ksh190.38 and Ksh188.74 respectively.
EPRA is expected to announce the new fuel prices for April-May in the next 10 days.
