The Central Bank of Kenya(CBK) expects Kenya’s inflation to remain elevated in the near term, due in part to the scaling down of the Government price support measures, resulting in increases in fuel and electricity prices, the impact of tax measures in the FY 2022/23 Budget, and global inflationary pressures.
Rising Rate of Inflation in Kenya
In September, inflation accelerated to a record high amid a continued increase in the cost of food, fuel, and housing.
Monthly inflation data by the Kenya National Bureau of Statistics (KNBS) shows the country’s overall rate of inflation in September stood at 9.2 per cent compared to 8.5 per cent in August.
The rate of inflation has remained in breach of the government’s target of 2.5 to 7.5 per cent, which is targeted and pursued to maintain stability in prices in the domestic market for the fourth consecutive month.
“The rise in inflation was largely due to increase in prices of commodities under food and non-alcoholic beverages (15.5 per cent); transport (10.2 per cent) and housing, water, electricity, gas and other fuels (7.3 per cent) between September 2021 and September 2022,” KNBS in a statement.
Further, the prices of commodities under furnishings, household equipment and routine household maintenance recorded a 10.7 per cent increase during the review period.
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 125.58 in August 2022 to 126.73 in September 2022.
The month-to-month Food and Non-Alcoholic Beverages Index increased by 0.3 per cent between August 2022 and September 2022.
Relative to August 2022, prices of maize flour- loose, beans and aromatic unbroken rice increased by 8.4, 3.5 and 2.9 per cent in September 2022, respectively. A kilo of loose maize flour retailed at Sh84.95 compared to Sh78.38 in August, while the price of two kilos of unbroken rice rose to Sh534.82 from Sh519.85.
During the same period, prices of tomatoes and carrots dropped by 10.2 per cent and 7.2 per cent, respectively. A kilo of tomatoes retailed at Sh93.64 while carrots retailed at Sh91.48.
KNBS noted that a number of quick-growing vegetables showed price falls in September as farmers recorded plenty of harvest after the long rains.
The Housing, Water, Electricity, Gas and Other Fuels Index increased by 2.5 per cent between August 2022 and September 2022 due to an increase in the prices of Electricity, 50 Kilowatts and 200 Kilowatts, which increased by 20.9 per cent and 15.3 per cent, respectively.
The rise in the cost of electricity was mainly driven by a 46.7 per cent increase in fuel energy cost. The price of kerosene/paraffin also rose by 14.6 per cent.
Transport Index increased by 3.6 per cent between September 2022 and August 2022. This was mainly attributed to an increase in the prices of diesel and petrol, which rose by 17.7 per cent and 12.6 per cent, respectively.