Recently, the Kenyan consumer has been experiencing what can only be called "The Perfect Storm" where everything falls into place to make a bad situation worse. General inflation has been on the rise leading to the typical Kenyan suffering from lower disposable incomes and general misery.

The Libyan crisis has lead to disruptions, albeit statistically inconsequential, in oil supply that has subsequently occasioned a huge spike in fuel prices. The annual average price of Brent Crude oil has risen from an average of $71.84 per barrel in 2009 to a current three month average of $129.61 per barrel. This is an astounding 81% rise, closer to home, the price per barrel of Murban crude oil obtained from the Abu Dhabi National Oil Corporation has rise from $78.30 in March of last year to $112.5 in March this year, a rise of  44%.

To make matters worse, the dollar exchange rate stood at an average of Kshs 76 per dollar last year compared to a high of Kshs 85 per dollar this year. This was a 12% rise, so actually fuel prices have risen by 81% + 12% to arrive at an astonishing 93% i.e. the percentage rise in fuel prices plus the percentage rise in the dollar. It is worth noting that in 2008 when fuel prices went through the roof, the dollar exchange rate was a modest Kshs 66 per dollar, this situation significantly buffered us from the rising fuel prices.

Oil is just a part of the equation, global wheat prices have risen by an average of 56% from 2009 and maize prices have risen by 70% from 2009. In addition, the country is experiencing a biting drought, made worse by the fact that the short rains that were predicted by the weatherman have not really materialised. All these factors collude to create the "perfect storm". Inflation has risen from as low as 3% last year to 9.18% as of March this year, this number is expected to rise. All in all, the consumer and eventually the country is going to have a tough year.

It is interesting to note that last year most analysts predicted GDP growth rates of 5-6% for 2011, with the important caveat of "if no shocks occur". How ironic? This year has been characterised by shock after shock. From Tunisia and the whole mid-east crisis, to Ivory Coast and significantly Japan, who literally provided a shock. It goes to show that we should not heed to much to analysts' forecasts, especially when they are based on "improving global conditions".

It can therefore be said that what we are witnessing and experiencing in the country can be pegged on "increasing commodity prices and a weakening shilling". Sadly, the powers that be have reacted in a manner akin to Marie Antoinette. When informed that the French people lacked bread; she responded by saying "Qu'ils mangent de la brioche" which translates to "let them eat cake". This showed just how detached she was from the suffering of the common man, just like the Egyptians and the Tunisians, the French also revolted leading to Napoleons' rise to rule all of France.

The actions of the finance minister Hon. Uhuru Kenyatta, when he announced that fuel taxes were to be reduced by 30% and 20% for Kerosene and Diesel respectively, were a bit of too little too late. It's like responding to a lion with a tooth pick.We need strong and lasting measures to ensure that such "perfect storms" are not witnessed again.

In the next article, I will discuss what some of those measures are, particularly dwelling on our Balance of Payments.