Global economists see a faster rise in Kenya’s average cost of living measure for 2023 than earlier projected, citing unfavourable rainfall and a weakening shilling against major international currencies.
Analysts polled from 15 world-leading banks, consultancies and think tanks have projected inflation to average 7.5 percent, slightly increasing from 7.2 percent late last year.
The forecast, if it comes to pass, will be little changed from last year's average of 7.6 percent, the highest in five years.
“For 2023, inflation is expected to recede amid cheaper oil imports and the dampening effect of domestic rate hikes,” analysts at Barcelona-based FocusEconomics, who compiled the consensus report between February 14 and 19, wrote.
“Extreme weather events and additional currency depreciation are upside risks.”
Kenya’s inflation in February edged to 9.2 percent from 9.0 percent the month before, the first rise since October, on renewed pressure from food prices amid elevated energy costs.
February’s gauge for the cost of living was the highest in a similar month since 2012 when it hit 16.7 percent.
The elevated inflationary pressures amid the projection of poor rainfall during the March-April-May main crop planting season has prompted the William Ruto administration to sanction duty-free importation of staple maize, rice, cooking oil, sugar, wheat and beans in coming months.
Kenya Meteorological Department has warned highlands west, central and south of the Rift Valley will experience below-average rainfall, dashing hopes of a good harvest this year.
The worsening cost of living crisis is compounded by a depreciating shilling in a net import economy which raises prices of goods as business pass on the additional overheads to the consumer.