Maize flour prices to continue going up until August

What you need to know:

The price of a two-kilogramme packet of maize flour has increased by an average of Sh5 over the past two months on high maize costs.
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.

Millers have warned that the price of maize flour may increase in coming weeks following a grain shortage, putting pressure on households that depend on the cereal as a major source of food.

The price of a two-kilogramme packet of maize flour has increased by an average of Sh5 over the past two months on high maize costs. Flour prices have been falling since last September.

The maize shortage has raised the cost of a 90kg bag to Sh2,500, up from Sh2,000 in January and millers say that the situation will worsen until the onset of harvesting in August.

“The supplies of maize have been tight in the market and millers are unable to get enough stocks, this situation would see the price of flour go up in the coming weeks,” said an official of the Cereal Millers Association.

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 5.45 per cent last month, down from 6. 78 per cent in February; it has been falling since the start of the year.

Millers have mopped up stocks in the market and it is not clear whether farmers are hoarding in anticipation of higher prices in the future as it has been the norm in the past.

A food security report released by the government early this year indicated that Kenya would have 16 million bags of maize by the end of December and was anticipated to last beyond March.

The report indicated that as at the end of December the country had 14,383,548 bags with farmers holding about 7,850,200 bags, traders 2,774,948 bags, millers 6,590,200 bags and National Cereals and Produce Board 3,795,000 bags.

Kenya has a deficit of 20 million bags of maize annually and relies on imports from Tanzania and Uganda to bridge the gap.

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, followed by utilities.

Kenyans are likely to get a reprieve in the coming months as Tanzania prepares to harvest its maize crop.

The Competition Authority of Kenya (CAK) is investigating allegations of price fixing by maize traders and millers.