Prices raised by 9% by manufacturers due to rising costs

Manufacturers raised the prices of their goods by an average of 9.1% in the year to December 2023 as they passed on to consumers the higher cost of doing business.
Data from the Kenya National Bureau of Statistics shows that during the period, manufacturers increased the cost of processed foods such as bread, flour and rice by an average of 2.01% and drinks by 8.39%.
Companies that make tobacco products such as cigarettes raised their prices by 9.52% even as the sector continues to be hit by frequent increases in excise duty, while chemical makers increased prices by 30.94%, the highest increase in the period.
Local assemblers of motor vehicles also raised prices by an average of 7.4% while electrical equipment manufacturers made a 15.6% price increase.
However, only 3 categories of manufacturers—those who make textiles, apparel and paper—decreased their prices by 0.98%, 6.4% and 0.57%.
“Over the last year, the highest price increase was in chemical and chemical products at 30.94% while the highest price decrease was in the manufacture of wearing apparel at 6.40%,” said the KNBS.
Manufacturers have been struggling under a growing burden of taxes even as prices of inputs—most of which are imported—continue to rise amid the rapid depreciation of the Kenya shilling against the US dollar.
The increase in taxes came as the Kenya Association of Manufacturers unsuccessfully lobbied against their introduction through the Finance Act 2023, which raised the cost of doing business.
The government last April raised the cost of electricity by up to 63%, dealing a blow to heavy industries where the cost of power accounts for as much as 30% of their running expenses.
This, coupled with muted consumer demand due to inflation, has curtailed the performance of manufacturing, which directly supports hundreds of thousands of jobs.
In the first half of 2023, for instance, the industrial sector recorded lower growth of 2.5% in the first quarter and 1.8% in the second quarter compared to 4.4% and 4.2%, respectively, in similar quarters in 2022.
“Activities in the manufacturing sector, which accounts for nearly half of the industrial sector output, were hampered by a decline in the manufacture of both food (particularly sugar production) and nonfood products,” said the Treasury.
Despite these challenges, the Treasury has tipped the sector to record improved growth this year, supported by improved availability of raw materials due to recovery in agricultural production and a decline in global commodity prices.
AGENCIES