NAIROBI, Kenya – Cigarette prices in Kenya have surged by 20-33pc, catching smokers off guard and straining their wallets.
Despite the withdrawal of the Finance Bill 2024, which proposed an excise tax increase, manufacturers have unilaterally raised prices, citing production costs.
Smokers woke up to find the price of a single cigarette stick increased by an average of Sh5 across all brands.
Popular brands like Sportsman now retail at Sh20 per stick, up from Sh15, while a packet has jumped from Sh300 to Sh400.
Embassy cigarettes have seen a similar hike, now costing Sh500 per packet, and Dunhill has reached Sh600 per packet, with individual sticks sold at Sh30.
Retailers were left scrambling for explanations as the price hike took effect overnight without prior notice.
Distributors mentioned receiving an email the previous night instructing the price hike, leaving both consumers and retailers blindsided.
This abrupt increase has led to widespread speculation among consumers about the possible implementation of the proposed excise taxes from the withdrawn Finance Bill.
The Bill, which President William Ruto declined to sign amid nationwide protests, had suggested a modest increase in excise duty on filtered and unfiltered cigarettes.
The current price hikes far exceed those proposed increases, leading to confusion and frustration among smokers.
Manufacturers, particularly BAT Kenya, have defended the price hikes, attributing them to rising production costs driven by economic instability, currency fluctuations, and increasing interest rates.
BAT Kenya reported a significant drop in profits by 19.2% to Sh5.57 billion for 2023, despite an increase in operational costs and taxation.
The company argues that price increases are essential to navigate the challenging economic environment and sustain its business operations, which support over 80,000 Kenyans.
However, consumer advocacy groups like the Consumer Federation of Kenya (Cofek) warn that such price increases, coupled with high taxation, could fuel illicit trade.
“When service providers and manufacturers increase their prices astronomically, without notice and reasonable cause, they simply over-price themselves out of the market,” said Cofek Secretary General Stephen Mutoro.
This sentiment is echoed by the Anti-Counterfeit Authority, which highlights that illicit trade, particularly in cigarettes and alcohol, costs the government over Sh153.1 billion in potential revenue annually.
