KNCCI says rising diesel prices could slash MSME profit margins by up to 15 percent while increasing transport, manufacturing and food distribution costs across Kenya.

📻 Breaking It Down

NAIROBI, Kenya, May 15 — The Kenya National Chamber of Commerce and Industry (KNCCI) has warned that the latest fuel price increase could cut MSME profit margins by up to 15 per cent, while triggering sharp rises in manufacturing, transport, and food distribution costs across the economy.

In a statement issued Friday, KNCCI President Dr Erick Rutto said the latest Energy and Petroleum Regulatory Authority (EPRA) pricing review will significantly raise operational costs for businesses, particularly following the sharp increase in diesel prices.

Under the new pricing cycle running from May 15 to June 14, diesel prices in Nairobi rose by Sh46.29 to Sh242.92 per litre, while super petrol increased by Sh16.65 to Sh214.25 per litre.

📌 What You Need to Know

KNCCI warned that the diesel-driven fuel shock is likely to trigger widespread inflationary pressure across transport, logistics, manufacturing, agriculture, and trade sectors.

“The current fuel increase is not just an energy issue; it is an economy-wide shock,” Rutto stated.

According to the Chamber, the latest fuel adjustments are expected to increase transport and logistics costs by between 10 and 20 per cent, while manufacturing and farm distribution expenses could rise by between 5 and 12 per cent.

KNCCI further projected that food and consumer goods prices could increase by between 3 and 7 per cent as businesses pass rising operating costs to consumers.

The business lobby particularly warned that micro, small, and medium-sized enterprises (MSMEs) face heightened vulnerability due to thinner operating margins and limited financial buffers.

“The latest increase is expected to squeeze MSME cashflows and profit margins by between 5 and 15 per cent,” the Chamber stated.

📰 Source: Capital FM Kenya