Kenya’s wholesale prices, as measured by the Producer Price Index, softened deeper to the negative territory in the 3rd quarter of 2024, pointing to cooling inflationary pressures.
- •Kenya’s wholesale prices, as measured by the Producer Price Index, softened deeper to the negative territory in the 3rd quarter of 2024.
- •The general wholesale prices were 3.6% lower than the prices recorded in the 3rd quarter of 2023 and 2% lower than prices recorded in the 2nd quarter of 2024.
- •According to data from the Statistics body, the PPI stood at -3.64% in the 3rd quarter of 2024 as compared to 9.83% recorded in the same period in 2023.
For the post-pandemic period between Q3 2021 and Q3 2024, producer prices have increased 22.6%. Food production costs – which carries the most weight in the basket – were 13.4% lower than in September 2023, pointing to favorable climate conditions in the review period, replenishing staple raw materials supply.
The highest price decline over the last one year, however, was recorded in the manufacture of pharmaceuticals at 16.5 percent.
Over the 12 months to September 2024, the highest price increases were in manufacture of non-metallic mineral products and manufacture of beverages at 32.5% and 15.2% respectively.
Similarly, electricity supply costs saw a 7.2% year on year contraction pointing to reduced cost of fuel used in production coupled with the strong shilling.
The index, which measures price changes for goods and services at producer level, decreased to 135.24 in September 2024 from 140.35 in September 2023.
The Central Bank of Kenya (CBK) has cut rates by 1% in the last two monetary policy meetings in a bid to spur economic activity. Consumer prices have been contained below CBK’s target range of 2.5% and 7.5% after a series of hikes in 2023 spilling over to 2024. The Kenyan shilling has stabilized, ranging between the 128-130 mark against the greenback.
The continued fall in producer prices stemming from lower demand and a slowdown in the economy is likely to put more pressure on the CBK to maintain their dovish stance.
