Economy

Nairobi’s richest pay dearly for electricity, fuel

fuel

An attendant at a fuel station in Nairobi. FILE PHOTO | NMG

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Summary

  • Fresh data from the Kenya National Bureau of Statistics(KNBS) shows that inflation for the city’s upper-income households stood at 4.87 percent in November.
  • This is significantly high growth since the inflation level on upper-income households in Nairobi stood at 2.28 percent in November 2020 and 2.91 percent at the start of 2021.
  • KNBS attributes the contrast in the inflation levels among income segments to different consumption patterns.

Inflation for Nairobi’s rich families hit a 23-month high at the end of last year, marking the sharpest rise among all income groups in the city on more expensive fuel and electricity.

Fresh data from the Kenya National Bureau of Statistics(KNBS) shows that inflation for the city’s upper-income households stood at 4.87 percent in November—the highest mark since December 2019 when it was recorded at 5.33 percent.

This is significantly high growth since the inflation level on upper-income households in Nairobi stood at 2.28 percent in November 2020 and 2.91 percent at the start of 2021.

The KNBS data however showed that inflation remained highest among the low-income earners at 5.86percent in November- albeit the lowest level since June when it was recorded at 6.17 percent.

The middle-income segment in Nairobi registered an inflation rate of 4.71 percent in November last year, marking a drop from 4.79percent the previous month and 5.44 percent in September.

The bureau defines low-income earners as those spending less than 46,355 monthly, middle class (between Sh. 46,356 and Sh184,394) and upper-income earners as households with expenses in excess of Sh184,395.

KNBS attributes the contrast in the inflation levels among income segments to different consumption patterns. The rich traditionally spend most of their income on utilities and transport while the poor use nearly half of their income on food.

Kenya’s inflation— a measure of changes in the cost of living year-on-year — rose to a 19-month high in September last year on the back of the rising cost of basic products such as fuel, food and electricity, signalling a painful cost pinch on budgets for households and businesses amid the Covid-19 pandemic impact.

The cost of living eased then eased in October for the first time in six months on reduced transport costs. It slowed further in December to an 11-month low, tamed by easing food costs and the government tapping a fuel-stabilisation fund to subsidise pump prices.

The country’s annual inflation rate fell to 5.7 percent, from 5.8percent in November.