How Rising Fuel Costs Are Driving Kenyan Businesses to Cut Jobs and Raise Prices

Business in Kenya got tougher in May. The Stanbic Bank Kenya PMI, a monthly health check on the private sector fell to 46.6, down from 49.4 in April. Any reading below 50 means conditions are getting worse, so this was the sharpest decline since July 2024.

Why it happened
Two forces dragged it down: weaker demand and rising costs, a trend also reflected in the latest KNBS data, which showed inflation accelerating to 6.7% in May.

1. On demand, customers pulled back on spending as prices climbed, so companies received fewer new orders. Sales fell at their fastest pace since mid-2025, with firms blaming tight household budgets and general caution.
2. On costs, input prices rose at their steepest rate since November 2023, driven mainly by higher fuel and transport costs. Businesses passed some of this on, raising their own selling prices at the quickest pace in two and a half years across all five sectors surveyed.
   The Impact
   The pressure also hit jobs. For the first time in 16 months, firms cut staff, mainly temporary workers on short term contracts. With fewer orders coming in, businesses simply needed fewer workers.
   Stanbic economist Christopher Legilisho also pointed to a week of nationwide transport sector protests, which disrupted movement and trade and added to the challenges facing businesses.

The Silver Lining
There were a couple of positives. Manufacturing was the only sector to record growth in output. And despite the challenging environment, business confidence improved to its highest level since February 2023, supported by plans to launch new products, increase marketing efforts, and expand online sales.

The Takeaway
Kenyan businesses are facing significant pressure today, but many remain confident that conditions will improve over the coming months.