Flour price hits 9-month high on rising maize costs

Maize flour prices have jumped to a nine-month high, putting pressure on household budgets and inflation.

Kenya National Bureau of Statistics data indicates that the price of a two-kilogramme packet rose to Sh112 last month, up from Sh110 in April, on rising maize costs. Flour prices last went above Sh110 in August 2014.

A maize shortage has raised the cost of a 90kg bag to Sh2,800, up from Sh2,200 in February.

Maize prices have a big effect on inflation in Kenya’s economy where it is the staple food and accounts for a significant share of poor households’ budget. Inflation stood at 7.03 per cent in June compared to 6.87 per cent in May.

Millers argue that the price of flour would be determined by market forces, ruling out the possibility of lowering costs any time soon.

“We cannot tell when the prices will drop because this move will only be informed by demand and supply,” said Cereal Millers Association chairman Nick Hutchinson in an earlier interview.

Kenyans are likely to get a reprieve in September when harvesting of this season’s crop is expected to start. Maize prices are expected to dip on increased supply.

READ: Flour prices high despite cheaper imports

In April, acting Agriculture secretary Adan Mohammed said the price of flour would come down this month after the state announced it would release 500,000 bags of maize into the market.

Millers argue that dwindling maize reserves are to blame for the high cost of flour, even as they shun the stocks that the National Cereals and Produce Board (NCPB) had allocated them over quality concerns.

The millers argue that the high cost of grain has pushed up the ex-factory price of flour from between Sh84 and Sh87 in February to Sh95 and Sh100 this month, representing a 13 per cent increase.

The millers are currently relying on stocks coming in from Tanzania and Uganda that land in Nairobi at Sh2,800, the same price that the state was offering them on the maize held in the Strategic Grain Reserve.