In the wake of a notable decline in the sales of petroleum products, subsequent to the recent adjustment of the value-added tax (VAT) on fuel from 8.0% to 16.0%, a rising contingent of oil marketers are strategically presenting discount enticements to allure customers. The endeavour involves the likes of Astrol, Ola Energy, Vivo Energy and Rubis, offering discounts ranging from Kshs 3.0 to Kshs 5.0 per litre of fuel. This strategic manoeuvre emerges as a response to the consumer base’s shrinking purchases, prompted by elevated prices, leading some to curtail consumption or shift to public transportation alternatives.
Read more: High Fuel Costs Impact Kenyan Consumers, Shifting Fuel Consumption Trends Emerge
Within the Nairobi market, super petrol now retails at Kshs 195.5 per litre, while diesel secures a selling price of Kshs 179.7 per litre. Notably, these figures represent the highest points since the inception of pump price regulations in Kenya. The progressive implementation of discounts by oil marketers comes amidst a backdrop wherein the Purchasing Managers’ Index (PMI) reported by Stanbic Bank Kenya indicates a persistent sales slump spanning three consecutive months. This pattern is driven by the towering inflation, a weakening shilling, and recent tax policy revisions introduced by the government, which collectively prompted consumers to curtail their expenditures.
Read more: Tough Economic Times Ahead, as Fuel VAT Retained at 16%
The PMI, a barometer tracking economic conditions, witnessed a drop to 45.5 in July from the prior month’s figure of 47.8, constituting the third successive month of deterioration from the score of 49.4 observed in May. The index, indicating a negative trajectory for six consecutive months, signifies a decline in business conditions. This phenomenon is particularly marked by a substantial decline in new business inflows, propelled by subdued client demand due to the ongoing cost of living crisis. In addition, business operations have been adversely impacted by political demonstrations, exacerbating the sales decline, thus underscoring the complex challenges facing the business landscape.
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