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INFLATION: The biggest risk in the next few months in Kenya
Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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KulaRaha wrote:Liv wrote:@Kularaha
Can subsidies really work to reduce inflation in this country?
Maybe the government can reduce taxes on oil products and since oil prices are now controlled this would be reflected in the pump prices.
But I gues that is the farthest it can go.... transport rates may not come down as many would see an opportunity for profiteering. Only a few businesses will gain from subsidies... the level inflation might not be affected. Some level of support on oil prices will help. jacking rates will do nothing except slow growth...this is supply side inflation. yes exactly, they cud cut taxes on oil imports as well as levies on pump prices...rampant inflation cannot be ignored if one is trying to foster growth
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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kizee1 wrote:KulaRaha wrote:Liv wrote:@Kularaha
Can subsidies really work to reduce inflation in this country?
Maybe the government can reduce taxes on oil products and since oil prices are now controlled this would be reflected in the pump prices.
But I gues that is the farthest it can go.... transport rates may not come down as many would see an opportunity for profiteering. Only a few businesses will gain from subsidies... the level inflation might not be affected. Some level of support on oil prices will help. jacking rates will do nothing except slow growth...this is supply side inflation. yes exactly, they cud cut taxes on oil imports as well as levies on pump prices...rampant inflation cannot be ignored if one is trying to foster growth And sack a few civil servants so they can balance the loss of revenue with lower spending... Business opportunities are like buses,there's always another one coming
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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KulaRaha wrote:Maybe we can sack all GOK employees and reduce the wage bill...and spend the money on oil subsidies...should work. Now if only wazua had the "I Like" button...$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 12/23/2010 Posts: 1,229
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hisah wrote:KulaRaha wrote:Maybe we can sack all GOK employees and reduce the wage bill...and spend the money on oil subsidies...should work. Now if only wazua had the "I Like" button... problem would be getting replacements who are willing to work for peanuts
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Rank: Member Joined: 1/26/2011 Posts: 211 Location: Nairobi
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I tend to think Fuel has the biggest multiplier effect on prices in general. The GoK currently levies Ksh 29/ Ltr as tax, if you add the Inefficiency costs by KPRL the costs passed to consumers starts to look ponographic.
If the GoK was really serious in taming the inflation, they would simply snip off the levy and ensure there is a trickle down effect.
But im sure the revenue hawks are already addicted to this steady revenue stream.
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Rank: Veteran Joined: 12/23/2010 Posts: 1,229
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Kirika wrote:
I tend to think Fuel has the biggest multiplier effect on prices in general. The GoK currently levies Ksh 29/ Ltr as tax, if you add the Inefficiency costs by KPRL the costs passed to consumers starts to look ponographic.
If the GoK was really serious in taming the inflation, they would simply snip off the levy and ensure there is a trickle down effect.
But im sure the revenue hawks are already addicted to this steady revenue stream.
Are you sure?
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Rank: Member Joined: 1/3/2011 Posts: 129 Location: Nairobi
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mpc raises rates to 6PCT. DISCUSS
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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hoping they act in a manner to suggest theyr moppin up liquidity
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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25 basis point hike back to 6% by MPC - Now they agree the rate cut to 5.75% was senseless  Do these guys know what they're doing..? The rate hike is still a long way to repair the damage of the devaluation. CBK should also initiate OMO activities to mop up the excess liquidity and stop revise repos for a while. Why fund the shilling short sellers and cry foul when the speculators home in... And they should also revise GDP expansion downwards. But some analysts will still expect NSE to hit 5000...   http://www.youtube.com/w...feature=player_embedded
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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It is good enough the good ol' Governor has conceded to the concerns somewhat. Let's see how it plays out.
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INFLATION: The biggest risk in the next few months in Kenya
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