Economy

Inflation hits 8.3pc on soaring food and fuel prices 

Naivas-fruits

A customer picks at Naivas Supermarket in Nyeri on August 7, 2021. FILE PHOTO | NMG

Kenya’s inflation climbed to a 61-month high in July on soaring food and fuel prices as well as cost of home equipment and appliances, the statistics agency reported on Friday.

Inflation — a measure of cost of living over the last 12 months— climbed to 8.3 percent last month from 7.9 percent June.

The Kenya National Bureau of Statistics said inflation was largely driven by average cost of food and non-alcoholic drinks which climbed 15.3 percent and “commodities under furnishings, household equipment and routine household maintenance which recorded a 9.8 percent increase”.

It marks the second month in a row that year-on-year cost of living measure crossed the upper limit target of 7.5 percent, a trend last witnessed five years when the country went to the presidential polls.

The inflation rate in July was the highest since June 2017 when it hit 9.21 percent.

Back then, the Treasury allowed subsidies and waiver of import duties to smoothen purchase of key food items such as maize, rice and milk powder from abroad.

The jump in the cost of basic commodities will further narrow the shopping basket of households who have already been forced to cut on non-essential expenditure amid negative growth in real wages.

“Relative to June 2022, prices of carrots, maize grain-loose and non-aromatic (unbroken) white rice and beans increased by 13.0, 9.7 and 4.2 percent in July 2022, respectively,” KNBS managing director Macdonald Obudho said in a statement.

“Alcoholic beverages, tobacco and narcotics index increased by 1.3 percent between June 2022 and July 2022. This was due to an increase in prices of beer (lagers and stouts), among other items.”

The Central Bank of Kenya on Wednesday left its benchmark lending rate at 7.5 percent unchanged, signaling lenders to keep the cost of loans steady.

The monetary policy committee —the central bank’s top decision making organ —argued the “moderating” international prices of oil, wheat and edible oil as well as maize flour and fuel subsidies will ease pressure on runaway inflation in the near term.

CBK governor Patrick Njoroge said on Thursday he expected inflation number to remain high this month.

The impact of staple maize meal subsidy which has lowered the cost to Sh100 from a high of Sh200 per two-kilogramme packet, he said, will be felt from August.  

“The price of unga (maize meal) was lowered to Sh100 per two-kilogramme pack. [But]… when KNBS went to survey prices not all stores had already adjusted to the new price,” Dr Njoroge told a press conference.

“The point is only next month will we get the full benefit of the subsidy of unga because by then all the stores would have brought their prices down to that level [Sh100] and when the KNBS people then measure it (inflation), they would see the new prices and not the old prices.”

The KNBS data shows carrots surged at the highest rate of 41.1 percent to an average of Sh105.31 per kilogramme in July from Sh74.65 a year ago.

It was followed by laundry soap whose cost per 800-gram bar jumped 34 percent to Sh165.70, while loose maize grain cost Sh72.32 per kilogramme, a 31.5 percent jump over Sh54.98 in July 2021. 

Despite a fuel subsidy keeping the cost unchanged in July, consumers paid 30.5, 29.8 and 25.0 percent more for kerosene, diesel and petrol.

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