Economy

Beer, beef prices in sharpest rise as Kenya fights drought  

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Beer, beef prices in sharpest rise as Kenya fights drought. PHOTO | NMG

Prices of foodstuffs including sukuma wiki (collard greens), matumbo (offal), beef and tomatoes rose the fastest in the past 10 years to 2021, hurting Kenyan households whose incomes barely increased in the period.

The prices of dry beans, maize flour, Irish potatoes, eggs and green grams also increased, underlining the country’s depressed agricultural production that has been aggravated by climate change with droughts occurring more frequently. 

Data from the Kenya National Bureau of Statistics (KNBS) show that prices of excisable goods such as beer and cigarettes also rose sharply between 2012 and 2021, pointing to increased excise duty, popularly known as sin taxes.

This comes at a time when the country is grappling with a high inflation rate —the overall increase in prices of goods and services — owing to poor weather, the war in Ukraine and the lingering effects of the Covid-19 pandemic.

Inflation stood at 9.5 per cent in November, a slowdown of 100 basis points compared to 9.6 per cent in October, with food and fuel contributing the most increase in the prices of basic commodities.

The KNBS data show that the average price of a kilo of sukuma wiki rose by 50.02 per cent to an average of Sh54.47 last year as poor weather continued to affect the crop.

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Sukuma wiki features prominently on the dinner tables of most Kenyan households for its low price.

The price of a kilo of matumbo, also a popular dish among low-income households, rose by 48.4 per cent to an average of Sh279.66 in 2021 from Sh188.39 in the review period.

The price of Tusker beer, popular with most middle-class beer drinkers, increased by 47.1 per cent to Sh174.52 in 2019 when KNBS stopped tracking the price of this alcoholic beverage, shifting to Lager and Stouts.

A 500 ml of Tusker retailed at an average of Sh118.63.

This price has since risen further this year following the decision by the government to increase excise duty, even as the Kenya Revenue Authority adjusted excise duty for inflation.

The taxman projects that the recent increases in excise duty as a result of inflation adjustments will net an additional Sh3 billion in revenues, even as manufacturers brace for lower demand.

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A kilo of beef with bones retailed at an average of Sh474.52, an increase of 46.9 per cent, from Sh322.95 in 2012.

A Kilo of tomatoes increased by 44.4 per cent to retail at an average of Sh101.99 last year.

The prices of margarine and dry beans increased by 40 per cent while those of loose maize grain and common salt increased by 36.4 per cent and 29.4 per cent respectively.

For long seen as poor people’s problem because food takes a huge chunk of space in their shopping basket, the skyrocketing cost of living has begun to worry the rich as well.

Half of the high-net-worth individuals cite inflation as a high concern, according to Standard Chartered’s Wealth Expectancy Report 2022.

The report noted that 67 per cent of Kenyan investors plan to reduce their cash holdings to outpace inflation, compared to 61 per cent of the global investors that opted for this route to deal with inflation.

“Investors face a complex reality, with inflation, the threat of recession and an uncertain global economy ranking as their top concern,” said Paul Njoki, the head of affluent banking and wealth management for Standard Chartered in Kenya and East Africa.

The latest Kenya Economic Update by the World Bank also indicated that a lot of Kenyan households were resorting to reducing food consumption, selling assets, buying on credit or borrowing to purchase food.

“The share of Kenyan households with members going hungry in the past 30 days due to a lack of food jumped from one-third in November 2021-March 2022 to more than half in June 2022,” said the World Bank.  

President William Ruto’s administration has introduced subsidised fertilisers as a means of dealing with the high cost of food production even as it scrapped some levies on imported maize.

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