CBK Expects Scrapped Subsidies to Raise the Rate of Inflation in Kenya

The central bank of Kenya (CBK) looks forward to an increased inflation rate in Kenya because of cutting down subsidies. Inflation will lead to an increased rate of electricity and fuel prices.

Kenya has experienced inflation since September, witnessing a rise in electricity, housing, and fuel costs.

According to the monthly data of the Kenya National Bureau of Statistics (KNBS), the inflation rate was higher in September compared to august. In September, it stood at 9.02 percent, while in august, it stood at 8.5 percent.

“The rise in inflation was largely due to an increase in prices of commodities under food and non-alcoholic beverages (15.5 percent); transport (10.2 percent), and housing, water, electricity, gas, and other fuels (7.3 percent) between September 2021 and September 2022,” KNBS in a statement. The inflation rate exceeded the government’s set target meant to maintain stability in prices in the domestic market for four months consecutively.

Besides electricity, housing, and fuel, other prices increased too. Furnishing, household equipment, and routine household maintenance shot by 10.7 percent.

The Consumer Price Index (CPI), which measures the percentage of household consumed goods, increased by 0.09 percent to 126.73 in September from 125.58 in august 2022.

The month-to-month Food and Non-Alcoholic Beverages Index increased by 0.3 percent between August 2022 and September 2022.

Maize flour- loose, beans, and aromatic unbroken rice prices increased by 8.4, 3.5, and 2.9 percent 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.

At the same duration, prices of tomatoes and carrots dropped by 10.2 percent and 7.2 percent, respectively. A kilo of tomatoes retailed at Sh93.64 while carrots retailed at Sh91.48.

However, KNBS speculated that the prices might fall since farmers expect a lot of harvest after the long rains.