Kenyan households and businesses are facing the steepest increase in transport costs in eight years after the government withdrew fuel subsidies, exposing consumers to higher petroleum prices triggered by the Middle East conflict.
Transport inflation accelerated to 17.1 per cent in October 2026, up from 15.6 per cent in September, marking its highest level since September 2018, when the government introduced Value Added Tax (VAT) on petroleum products.
The increase followed the withdrawal of fuel subsidies in October after the Petroleum Development Levy (PDL) Fund was depleted by months of spending to cushion consumers against rising international oil prices.
The government had relied on the fund to moderate pump prices following the outbreak of the US-Israel war with Iran in February, which disrupted global energy supplies and pushed up petroleum costs.
The subsidy withdrawal translated into higher prices at fuel stations. In October, a litre of super petrol in Nairobi averaged KSh227.85, compared with KSh185.59 a year earlier, representing a 22.8 per cent increase.
Diesel prices climbed 32.5 per cent to KSh228.77 per litre from KSh172.64, while kerosene rose 41.6 per cent to KSh220.88 from KSh155.96.
The increases have particularly affected public transport operators, freight companies, farmers and manufacturers, whose operations depend heavily on diesel.
Passengers have already felt the impact through higher fares. On the Kabarnet-Nakuru route, fares reached KSh650 in October, compared with KSh500 during the same month last year. In Nairobi, matatu fares between Westlands and Kangemi increased from KSh40 to KSh50.
Boda boda charges between Siaya town and Awelo also rose from KSh50 to KSh70, according to data reported by the Kenya National Bureau of Statistics (KNBS).
The increases are adding pressure to household budgets, particularly for workers who rely on public transport to commute daily. Businesses are also facing higher costs to distribute merchandise, transport agricultural produce and deliver services.
The impact is extending beyond transport. Diesel is widely used in agricultural machinery, industrial operations and logistics, meaning higher fuel expenses can eventually translate into more expensive food and consumer goods.
Kenya's overall annual inflation rate rose to 7.3 per cent in October from 6.76 per cent in September, nearing the upper limit of the government's 2.5 to 7.5 per cent target range.
Food and non-alcoholic beverages recorded annual inflation of 10.2 per cent, while housing, water, electricity, gas and other fuels increased by 3.7 per cent.
The government had introduced fuel subsidies to cushion consumers from the international oil shock, at one point applying a record KSh34.07 subsidy per litre of diesel in the pricing cycle ending July 14.
However, the cost of maintaining the intervention eventually exhausted available resources. The Energy and Petroleum Regulatory Authority said the withdrawal was necessary to preserve funds against future supply disruptions and increased global demand during Europe's winter.
The government has retained the reduced eight per cent VAT rate on petroleum products for another three months, offering some relief despite the subsidy withdrawal.
The latest figures highlight the difficult balance facing policymakers as they seek to protect households from expensive fuel without exhausting public resources. With transport inflation now at an eight-year high, the cost of moving people and goods remains a major threat to the cost of living.
