Money Markets

Kenya's inflation rate hits 14.49 pc in June

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Residents of Kisumu town queue for maize flour outside a shop last month. A combination of a weak shilling, high food and fuel prices conspired to push the inflation rate to a 19-month high in June. File

Residents of Kisumu town in western Kenya queue for maize flour outside a shop last month. A combination of a weak shilling, high food and fuel prices conspired to push the inflation rate to a 19-month high in June. File 

By PAUL WAFULA

Posted  Wednesday, June 29  2011 at  16:15

The combination of a weak shilling, high food and fuel prices conspired to push the inflation rate to a 19-month high in June, causing concern over its possible impact on consumer purchasing power and the overall growth prospects.

Official data released yesterday indicates that the cost of living rose at the rate of 14.49 per cent in a month that saw the Kenyan shilling touch an historic low of Sh92 to dollar wiping out Finance minister Uhuru Kenyatta’s recent attempts to contain it through fiscal policy.

Kenya National Bureau of Statistics (KNBS) linked the surge in inflation pressure to high transport and energy prices in the month – as the shilling weakened raising the cost of imported goods across the board.

Food prices, which rose by 22.52 per cent from a year earlier, provided the greatest impetus to the rise in consumer price index besides the cost of transport that rose by a margin of 22.71 per cent.

For instance, the average price of a 2kg packet of sifted maize flour rose from Sh95 in April to Sh109 in May and Sh130 in June.

“This was the result of significant increase in the cost of maize flour, maize grain, carrots, sugar and rice,” said the KNBS director Anthony Kilele.

It remains to be seen what impact the near tripling of the rate of inflation from January’s 5.45 per cent will have on the rate of economic growth whose target this year is six per cent.