The Kenya National Bureau of Statistics has released monthly consumer price indices and rates of inflation for July 2018. Overall y/y inflation reached 4.35 compared to 7.47% in the same period last year.
However, inflation rate month on month went up by 0.05 points to 4.35% compared to 4.28 in June 2018.
Between June and July 2018, Food and Non-Alcoholic Drinks’ Index decreased by 2.40 per cent. This was attributed to decrease in prices of some foodstuffs outweighing increases recorded in respect of others.
The year on year food inflation similarly, decreased from 0.9 per cent in June 2018 to 0.53 per cent in July 2018.
Housing, Water, Electricity, Gas and Other Fuels’ Index, increased by 0.12 per cent in July 2018 compared to 0.52 per cent recorded in June 2018. This was mainly attributed to increase in prices of kerosene, electricity and cooking gas.
During the same review period, the Transport Index increased by 0.62 per cent mainly on account of increase in the pump price of petrol which outweighed decrease in price of diesel.
The numbers are generated from a survey of retail prices that targeted a basket of household consumption goods and services.
CBK Cuts Key Rate
The Central Bank of Kenya surprised the markets by lowering its benchmark interest rate by 50 bps to 9.0 percent at its July 30th 2018 meeting. This was the second cut sin 2018, bringing borrowing cost to the lowest since 2015.
The Committee noted that inflation expectations were well anchored within the target range, and that economic growth prospects were improving. Furthermore, economic output was below its potential level, and there was some room for further accommodative monetary policy.
