Kenya’s inflation rate climbed more than expected and exceeded the ceiling of the central bank’s target range for the first time in almost five years, increasing pressure on policymakers to hike the key interest rate.
Annual inflation accelerated to 7.9% in June from 7.1% a month earlier, the Nairobi-based Kenya National Bureau of Statistics said Thursday in an emailed statement. That’s the highest level of Kenya’s inflation rate since August 2017.
In the latest figures, the Consumer Price Index (CPI), which measures the percentage change in the price of a basket of goods and services consumed by households, increased by 0.9 per cent from an index of 123.12 in May 2022 to 124.22 in June 2022.
“The rise in Kenya’s inflation was mainly due to increase in prices of commodities under; food and non-alcoholic beverages (13.8 per cent); furnishings, household equipment and routine household maintenance (9.2 per cent); transport (7.1 per cent) and housing, water, electricity, gas and other fuels (6.8 per cent) between June 2021 and June 2022,” KNBS said in a statement.
Commodities Contributing to Kenya’s Inflation Rate
The month-to-month food and non-alcoholic beverages index increased by 1.2 per cent between May 2022 and June 2022.
Compared to May 2022, prices of wheat flour-white, carrots and cooking oil (salad) increased by 12.7, 4.7 and 4.7 per cent in June 2022, respectively.
A kilo of wheat flour-white retailed at Sh186.90 in June compared to Sh165.89 in May while a litre of cooking oil retailed at Sh387.98 up from Sh370.71. During the same period, prices of onions-leeks and bulbs and potatoes (Irish) dropped by 5.3 per cent and 4.8 per cent, respectively. A kilo of onions retailed at Sh134.58 while a kilo of potatoes was Sh84.85.
The furnishings, household equipment and routine household maintenance index, increased by 1.5 per cent between May 2022 and June 2022. This was due to an increase in prices of laundry/bar soap 4.2 per cent and detergents 2.6 per cent.
The housing, water, electricity, gas and other fuels index, increased by 0.9 per cent between May 2022 and June 2022.
The transport index increased by 0.9 per cent between May 2022 and June 2022. This was mainly attributed to increasing in prices of diesel and petrol which rose by 6.8 per cent and 6.0 per cent, respectively.
The East African nation is likely to face increased price pressures on food in the coming months due to reduced corn production because of the doubling of fertilizer costs and poor rainfall, according to a World Food Programme study. Plans by the Treasury to end the nation’s fuel subsidy program in the fiscal year starting July 1 are also likely to fan Kenya’s inflation.
Read also; Kenya’s Inflation Rises to a 2-Year High of 7.1% in May as Food Prices Soar.
