Price expectations in Kenya have taken a sharp hawkish turn as global geopolitical instability threatens to undo months of relative price stability.
- •A significant majority of respondents in the Central Bank of Kenya’s (CBK) March 2026 Agriculture Sector Survey now expect overall inflation to climb over the next one to three months.
- •The shift in sentiment is largely attributed to the "adverse impact" of the escalating conflict involving the U.S., Israel, and Iran, which has already rattled global supply chains and energy markets.
- •Respondents cited higher international oil prices and the "disruption of global supply chains triggered by the escalation of war in the Middle East" as the primary catalysts for their dimmed outlook.
The survey results mark a dramatic reversal from just one month ago. In February, only 28% and 40% of sampled participants expected inflation to rise in the one- and three-month horizons, respectively. By March, those figures surged to 59% for the one-month outlook and 62% for the three-month outlook.
Domestically, transport costs (cited by 91% of respondents) and input prices (71%) remain the most critical factors influencing retail price dynamics.
Despite the darkening inflationary cloud, there is a distinct pocket of optimism within the domestic economy. Over 80% of respondents remain bullish on the performance of the agriculture sector for the coming year, buoyed by the expectation of favorable "long rains" between March and May 2026.
The CBK’s "Balance of Opinion" (BOO) metric, which measures the net difference between positive and negative views, showed high levels of optimism for staple crops like millet and rice, with 75% and 67% of farmers respectively planning to increase acreage.
The survey findings pose a potential challenge for the Monetary Policy Committee (MPC), which monitors these developments to inform its interest rate decisions. While internal factors like potential "bumper harvests" and a stable exchange rate could provide a buffer, the external "shock" of the Middle East conflict appears to be the dominant driver of current consumer and producer anxiety.
"Most sampled respondents... were optimistic that the current growth momentum would continue," the report noted, though it warned that those with a less favorable view were increasingly concerned about "low purchasing power" and the "sharp increases in international oil prices" resulting from the conflict.
