Cost of living eases slightly on cheaper power costs
Parking attendants issue a motorist with a parking ticket on a Nairobi street. February inflation dropped to 6.86pc from 7.21pc in January despite marginal increases in food, fuel and transport costs. FILE
The cost of living eased slightly last month helped by a drop in electricity bills despite small price increases of a few basic commodities.
The Kenya National Bureau of Statistics (KNBS) inflation report released on Friday showed that in February the level of inflation fell to 6.86 per cent compared with 7.21 in January.
This was attributed to lower electricity charges along with reduced forex adjustment costs.
While the price of kerosene decreased in the review period, that of cooking gas, charcoal and firewood rose, heaping pressure on household budgets.
The consumer price index (CPI) for food and non-alcoholic drinks rose marginally by 0.36 per cent. The CPI is a measure of changes in the price level of a basket of select consumer goods.
A drop in the inflation rate portends well for households and businesses.
Low prices of commodities, reflected by lower levels of inflation, means the shopping basket of households gets fuller with the same level of income, resulting in an expanded aggregate demand.
This provides a ready market for firms as opposed to when the cost of living is high, where consumers opt to cut their spending or resort to cheaper alternatives.
The Central Bank of Kenya (CBK) is tasked with ensuring inflation remains low and stable to preserve consumers’ purchasing power.
The target rate for CBK is five per cent, a level that the Monetary Policy Committee has sought to achieve through setting a base lending rate of 8.5 per cent. Despite the CBK rate being relatively low, banks have maintained an average cost of loans of 17 per cent.
The inflation report shows that the CPI went up by 0.38 per cent, from 145.4 in January to 145.95 last month.
It indicated that the transport cost went up last month by a fraction.
“Transport index increased by 0.24 per cent over the same review period, mainly on account of higher prices of petrol, diesel, parking charges as well as public transport fares,” KNBS director general James Gatungu said in the report.
Nairobi County has doubled parking charges in a bid to encourage use of alternative transport means such as public vehicles and the train in efforts to decongest the city centre.
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