Inflation Falls 6.7% Amidst Rise of Power, Rent Prices

According to the most recent official figures, Kenya’s inflation decreased from 7.3 percent in July to 6.7% in August.

This is true despite rising costs for necessities like power, rent, and fuel, as well as high rents.

While indicating that the overall cost of living index had slightly decreased, the Kenya National Bureau of Statistics (KNBS) acknowledged in a statement that prices for the majority of consumer products had increased.

KNBS, however, highlighted there was a general increase in the price of essential items in accordance with the most recent CPI, which was released on Thursday.

“During the reference month, all sectors continued to record general increase in prices,” said Mr Obudho.

“Prices of commodities under transport; food and non-alcoholic beverages; and housing, water, electricity, gas and other fuels, increased by 13.1, 7.5 and 7.5 per cent respectively between August 2022 and August 2023.”

According to KNBS, most food product costs decreased at that time.

It singled out the costs of potatoes, tomatoes, fortified maize flour, loose maize grain, and loose maize flour, which it claimed fell by 8.2, 7.3, 6.1, and 3.5%, respectively, between July and August of this year.

KNBS admitted that the cost of a 200 kilowatt hour (kWh) and a 50 kilowatt hour (kWh) increased by 1.5% and 1.8%, respectively.

The cost of gasoline and diesel remained constant between July and August, according to KNBS.

Due to a rise in the cost of some routes for rural buses, the transport index increased throughout the period by 0.3%.

In parallel, the cost of a 13kg cylinder of liquified petroleum gas (LPG) fell 2.8% between July and August.

Pressure has been put on the Kenya Kwanza administration, which entered office in September, to lower living expenses.

However, a number of interest groups have criticized several of its proposed tax and policy initiatives, escalating societal unrest.

Recent approval of the contentious Finance Act, 2023 by the Court of Appeal portends additional hardship for consumers at a time when inflation has reduced many Kenyans’ purchasing power amid a weakening shilling.

Njuguna Ndung’u, the National Treasury Cabinet Secretary, may be in hot water if he does not assist the government in addressing the high cost of living, it was recently revealed.

Inability to keep the inflation rate, which reflects the cost of living, within the government’s target and favored range of 2.5% to 7.5% could result in Prof. Ndung’u losing his job.

In an effort to increase personal accountability for his senior ministers, President William Ruto has placed strict requirements on his chief financial officer.

“To ensure macroeconomic stability and growth is maintained, the Cabinet Secretary will: develop and implement a macroeconomic framework that fosters; a strong economic growth of 5.5 per cent in 2023,” says part of the performance contract signed by the CS.

“(He will) collaborate with the Central Bank of Kenya to maintain the inflation rate at five per cent +/-2.5 per cent.”

Key food item costs have climbed dramatically over the past few months, placing further strain on cash-strapped people still feeling the financial effects of the Covid-19 outbreak.

The pressure on the shilling versus the dollar has prepared the nation for higher import costs and trouble with debt servicing.

The shilling was quoted by the CBK at 145.5088 to the dollar on Friday. The shilling’s decline has raised concerns about the possibility of new inflationary pressure.

This is due to the nation’s reliance on imports for vital industrial inputs like gasoline and raw materials like wheat and edible oil, as well as agricultural inputs like fertilizer.