The inflation rate and new tax regimes are set to increase the cost of basic commodities in the country starting from October 1.

Prices of commodities will hike after the government applies annual inflation tax adjustments on excise duty charged on the products.

According to a statement dated Thursday, September 1, the excise tax is set to increase by 6.3 per cent. The increase is in line with the average annual inflation.

Products whose retail prices will increase include cigarettes, wine, toothpaste, motorcycles, imported sugar, imported sim cards, imported white chocolate, beverages, and cigars.

Others include packaged water, juice fruit, nicotine products and other products manufactured using tobacco.

“The specific rates will be adjusted using the average inflation rate for the financial year 2021/2022 of six decimal three per centum (6.3 per cent), as determined by the Kenya National Bureau of Statistics, and the adjusted specific rates will be effective from October 1, 2022,” the taxman’s statement read in part.

The application of the annual inflation tax is in line with the law that demands excise duty be revised upwards in tandem with the cost of living measure.

This will compel the manufacturers and other traders to pass on the additional costs to consumers. However, the taxman has called for public participation before effecting the adjustments in October.

On Wednesday, August 31, the Kenya National Bureau of Statistics (KNBS) disclosed that ​​​​​​prices of basic commodities increased in the last month.

According to their statement, food and non-alcoholic beverages Index increased by 0.5 per cent between July and August. August’s inflation rate rose to 8.5 per cent from 8.3 per cent in July, owing to the higher food prices.

Relative to July, prices of maize flour, sugar and mangoes increased in the month under review.

Housing, electricity, fuel, gas, water and furnishing equipment increased during the period under review, according to the KNBS statement.

The increase is set to affect the cost of living, which has hit the ceiling since the pandemic’s start.
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