NAIROBI, Kenya — The Kenya Association of Manufacturers (KAM) has raised concern over the sharp increase in fuel prices, warning that the surge will significantly raise production costs and deepen the cost-of-living crisis.
In a statement issued on May 18, 2026, KAM said the latest fuel price adjustment announced by the Energy and Petroleum Regulatory Authority (EPRA) has pushed prices to historic highs.
Super petrol now stands at Sh214.25, diesel at Sh242.92, and kerosene at Sh152.78.
The manufacturers’ lobby said fuel prices have risen by an average of about Sh80 between March and May, placing pressure on households and businesses.
KAM noted that although the government reduced VAT on petroleum products from 16 pc to 8 pc in April 2026, the relief has been offset by continued price increases.
Manufacturing sector under pressure
The association warned that fuel remains a critical input across the manufacturing value chain.
It said manufacturers rely heavily on diesel, industrial diesel oil, and heavy fuel oil for production, transport, and distribution.
“Access to affordable and reliable fuel is essential for industrial productivity,” the statement read.
KAM added that fuel costs affect raw material sourcing, production processes, and the movement of finished goods.
Taxes account for a major fuel cost
The lobby group highlighted that taxes and levies account for approximately 46 pc of retail fuel prices.
These include excise duty, VAT, road maintenance levy, petroleum development levy, railway development levy, and anti-adulteration levy.
KAM said this tax burden continues to strain manufacturers, especially at a time of high inflation and rising operational costs.
Rising transport and logistics costs
The association warned that increased fuel prices are already being passed on to consumers through higher transport fares and commodity prices.
It said logistics disruptions and fare increases are making commuting increasingly unaffordable for workers who rely on public transport.
Recent nationwide transport disruptions, including strikes and protests, have further affected supply chains and business operations.
Economic ripple effects
KAM cautioned that rising fuel prices will increase electricity costs, since fuel contributes to power generation tariffs.
It also warned that higher production costs will lead to increased prices of consumer goods, further straining household budgets.
The association said some sectors, including agriculture, transport, and manufacturing, are already experiencing reduced productivity due to high input costs.
KAM urged the government to urgently intervene and consider reviewing fuel-related taxes and levies to stabilise prices.
The association also called for targeted fiscal measures to inject liquidity into the economy and support businesses.
It said reducing fuel costs would help lower commodity prices, stabilise supply chains, and improve economic competitiveness.
KAM reaffirmed its willingness to work with the government and stakeholders to develop long-term solutions to the ongoing energy and cost-of-living challenges.
