Markets & Finance

Cost of living eases as food, fuel prices drop

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Easing in the cost of living in November has been attributed to falls in the price of electricity, fuel and food – sugar, milk, sifted maize flour and potatoes. PHOTO | FILE

Inflation has dropped to 15-month low in November helped by declining prices of food, electricity and fuel.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the cost of living measure stood at 6.09 per cent down from 6.43 per cent last month and a just above 6.02 per cent for July last year.

This is the third consecutive month inflation reduced since August when it hit a 25–month high of 8.36 per cent.

KNBS attributed the easing in the cost of living to falls in the price of electricity, fuel and food – sugar, milk, sifted maize flour and potatoes.

The price fall of the commodities, which have significant impact on household budgets, looks set to embolden policy makers’ resolve to keep inflation within the government’s preferred target. Falling inflation also signals a likelihood of lower interest rates.

Kenyan authorities prefer inflation at between 3.5 and 7.5 per cent.

Electricity prices have since September dropped by between 18.7 per cent and 27.4 per cent following the injection of 210 megawatts of geothermal power into the national grid, with 140 megawatts added in late July and 70 megawatts in September.

The Energy Regulatory Commission (ERC) cut the maximum price of super petrol in Nairobi by Sh4.57 per litre to Sh106.88 in the month and lowered the price of diesel by Sh6.15 per litre to Sh94.52. The price of kerosene fell by Sh4.57 per litre to Sh76.31. This was due to sliding global prices of oil.

READ: Kenyans get lowest fuel prices in two years

Retailers cut the price of a two-kilogramme packet of flour to Sh98 from Sh105 last month and Sh113 in September on increased supply of maize following bumper harvest in the Rift Valley. 

READ: Falling fuel, flour, electricity prices ease inflation pressure