Inflation among Nairobi’s rich households hits 17-month high

The January inflation rate rose to a 17-month high among the rich Nairobi households as families grappled with rising school fees and entertainment costs.

Official data shows that inflation for the upper income group rose from 4.83 per cent in December to 5.44 per cent last month — the highest rate since August 2014.

The upper income earners was the only segment to record a rise in the cost of living measure in January as the middle class and low-income homes experienced drops.

The difference in inflation levels among Nairobi’s income segments is linked to their different spending habits and abilities.

The rich spend more on education and leisure activities, followed by middle class homes while the poor spend the least.

“The education, recreation and culture indices recorded increases over the same period on account of hike in book and tuition costs,” the Kenya National Bureau of Statistics (KNBS) says.

Rich homes on average spend 5.8 per cent of their income on education expenses while the middle class spend 5.7 per cent, according to KNBS.
By comparison, education costs take up only 1.6 per cent of the poor’s budgets.

Most rich homes send children to high-end private schools that offer students world-class education, preparing them for admissions to top universities abroad.

READ: Nairobi's middle class inflation up to 27-month high

Nairobi-based Brookhouse, for instance, charges fees ranging from Sh220,000 to Sh910,000 for each of the three terms, depending on the level of study and whether a student is boarding or not.

This places annual fees for those in year two or higher above Sh1.3 million, making the school a preserve of high-net-worth households.

The KNBS notes that the introduction of higher excise tax in December triggered a rally in the prices of beer, juice and bottled water, which are popular with rich homes.

Inflation for middle class homes dropped to 5.91 per cent in January from 7.09 per cent the previous month while that for poor homes eased to 7.68 per cent from 8.7 per cent.

The cost of living measure for the 46 counties outside Nairobi edged up narrowly to 8.16 per cent.

Overall, Kenya’s inflation eased to 7.78 per cent on reduced electricity and petroleum costs.

Rich homes in Kenya’s capital spend the bulk of their monthly income on transport at 27.9 per cent while the middle class spend the most of their income on utilities and rent at 23.6 per cent.

Food consumes the bulk (42.5 per cent) of the poor’s monthly incomes, exposing them to food inflation.