The Monthly Inflation Rate figures for Kenya, as measured by the Consumer Price Index (CPI), eased to 7.3% in July 2023 from 7.9% in June 2023, the second consecutive drop since June this year and the lowest level in a year since the rate of 7.9% in May 2022.
This monthly rate drop in the cost of living has largely been driven by a fall in the price of several basic food items, electricity, and cooking gas.
According to figures released by the Kenya National Bureau of Statistics(KNBS), Kenya’s monthly inflation figures also dropped below the Central Bank of Kenya(CBK) target range of 2.5%- 7.5%, for the first time in months.
This is even as a tighter monetary policy stance adopted by the CBK after the June 2023/24 National Budget, begins to seep through the economy.
Kenyan Households experienced a reduction in prices of various key food items in July, including Irish Potatoes, Tomatoes, Cowpeas, Carrots, Oranges, Peas, Spinach, Beans, Wheat flour, Fresh flavored packeted cow milk, Cooking gas/LPG, and Electricity.
In July, the biggest price reduction was in 1kg of Irish potatoes, which fell by 12.2% from KSh 101.41 in June to fetch KSh 89.07 per kilo last month while transport costs recorded the highest increases in July due to a hike in diesel and petrol. This follows the adjustment of fuel pump prices by the Energy& Petroleum Regulatory Authority(EPRA) after an increase in Value Added Tax (VAT) on fuel products from 8% to 16%, as contained in the controversial Finance Act 2023.
Inflation Drivers in July 2023
According to the KNBS, the inflation rate for July 2023 fell largely due to a reduction in Food and Non-Alcoholic Beverages; Housing, Water, Electricity, Cooking Gas, and Other fuels, between June and July 2023. These three broad categories of items comprise over 57% of the Consumer Basket.
The CPI increased by 0.1 percent from an index of 134.01 in June 2023 to 134.15 in July 2023. The month-to-month Food and Non-Alcoholic Beverages Inflation Index decreased by 0.5% between June 2023 and July 2023.
Prices of most food products dropped during the period, food being the key driver of inflation. In particular, the prices of potatoes, tomatoes, cowpeas, and cabbages declined by 12.2%, 10.1%, 8.3%, and 8.1% respectively, between June 2023 and July 2023. However, during the same period, the price of onions increased by 11.4%.
The Housing, Water, Electricity, Gas and Other Fuels Index, decreased by 1.2% between June 2023 and July 2023. This was mainly due to a decline in the prices of cooking gas/LPG and electricity.
During the review period, the prices of 13 kg gas/LPG, electricity 200 kilowatts, and electricity 50 kilowatts decreased by 9.2%, 5.3%, and 4.4%, respectively, between June 2023 and July 2023. During the same period, however, the prices of kerosene rose by 5.0%, hurting the pockets of most low-income households that depend on the item for home use.
The Transport Index went up by 3.5% between June 2023 and July 2023 mainly due to an increase in prices of petrol and diesel, which rose by 6.9% and 7.4%, respectively. During the same period, fares for most public transport countrywide routes went up by at least KSh 50.
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