Consumers may find some relief in cheaper products in the coming months after factory costs dropped to levels last recorded 30 months ago.
Latest data from the Kenya National Bureau of Statistics (KNBS) shows that the Producer Price Index (PPI), which tracks changes in selling prices received by domestic manufacturers or producers for their output, stood at 134.78 as of the close of September 2025, levels last seen in March 2023.
Producer inflation is a measure of the average change in selling prices received by domestic producers for their output, and it is tracked by PPI.
It shows price trends from the producer’s perspective, reflecting increases in production costs before those costs are passed on to consumers.
In cases where PP1 is elevated, it translates to higher consumer prices as the manufacturers seek to recoup the additional cost incurred in production.
“The year-on-year producer inflation rate recorded in September 2025 was -0.79 percent, with the Producer Price Index reaching 134.78 during the same period,” said the KNBS in its latest review of price movements.
“Over this period, declines in price for various sectors were observed across all the different industrial sectors.”
The official data shows that during the quarter under review, the manufacturing sector posted a 0.52 percent drop in producer costs, while mining and quarrying recorded a sharper decline of 4.48 percent.
The cost of electricity, gas, steam, and air conditioning supply fell by 2.03 percent, as water supply and waste management dropped by 2.69 percent.
“The overall producer prices in September 2025 decreased by 2.45 percent compared to June 2025 prices,” wrote the KNBS.
The sustained fall in producer costs indicates continued softening in production expenses, partly supported by lower global commodity prices and a stronger shilling during the review period.
The easing producer costs come at a time when the Central Bank of Kenya has maintained a relatively accommodative policy stance, cumulatively lowering the benchmark lending rate by 3.75 percentage points since August last year to support private-sector lending.
But while businesses pass on increases in the cost of raw materials in the form of high retail prices, a fall in PPI does not guarantee reprieve to consumers.
This is mainly because businesses can opt to widen profit margins when the cost of raw materials drops, denying consumers anticipated gains.
The Consumer Price Index, which measures the actual change of retail prices, rose slightly to 146.56 in September, up from 146.21 the preceding month, pushing monthly inflation up by 0.2 percent.
