Economy

Rent, fuel prices lift inflation for first time this year

inflation

A worker at a petrol station in Eldoret town adjusts fuel prices upwards. PHOTO | JARED NYATAYA

Inflation last month rose for the first time since the start of the year, pushed up food, petroleum and house rent charges.

Official data released Thursday show that the cost of living increased to 5.8 per cent from five per cent in May, rising by the biggest margin since May 2014.

The rate had dropped in five consecutive months since December when it hit 8.01 per cent.

“Between May and June, food and non-alcoholic drinks’ index increased by 2.06 per cent,” the Kenya National Bureau of Statistics (KNBS) said.

“Housing, water, electricity and other fuels’ index increased. This was mainly attributed to price increases in kerosene and house rents which outweighed notable fall in cooking gas price,” said KNBS.

Tomatoes recorded the biggest rise by Sh17 to Sh171 per kilogramme (kg), followed by onions by Sh10 to Sh143 a kg while a similar quantity of cabbages rose by Sh4 to Sh59.

Maize flour, Kenya’s staple, rose by Sh2 to Sh110 per two-kg packet while carrots were up Sh4 to Sh93 a kg.

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, making it the main driver of the cost of living measure.

The energy regulator mid-June raised the prices of diesel and petrol to match the rebounding global crude prices, piling pressure on motorists. 
Fuel prices have a direct bearing on inflation.

Higher diesel prices often put pressure on manufacturers’ production costs, forcing them to pass on the additional costs to consumers through higher commodity prices.

Rising petrol and diesel prices also push up transport expenses as it becomes expensive to keep vehicles on the roads.

Motorists are expected to absorb an additional Sh6 as road maintenance levy per litre of petrol and diesel next month in July 15 pump price review.

READ: Relief for motorists after new fuel levies fail to take effect

Treasury Cabinet Secretary Henry Rotich on June 8 announced the increment of the levy from Sh12 to Sh18 per litre of petrol and diesel but did not reflect in pump prices immediately.

The KNBS data shows that electricity prices remained unchanged since January.

Homes that consumed 200 kilowatt hours (kWh) in June paid Sh3,398 while those that used 50 units were set back Sh534.

The average rent for a two-bedroom flat stood at Sh20,056 in June, Sh20,040 a month earlier and Sh19,490 in June last year. This marks a three per cent rise in rent over the past year.

Homes, however, got a reprieve from lower cooking gas prices that stood at an average of Sh2,229 for a 13-kg cylinder, Sh2,252 in May and Sh2,393 last year.

At 5.8 per cent, June’s inflation remains within the Central Bank of Kenya’s preferred range of between 2.5 per and 7.5 per cent.