Commodities

Costly cooking oil, beef, bread hit family budgets

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CBK governor Patrick Njoroge. FILE PHOTO | NMG

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Summary

  • Higher prices of cooking oil, beef, and bread have pushed food inflation to a 14-month high of 8.8 percent, straining the budgets of households that are already grappling with costly energy.
  • Twelve-month Central Bank of Kenya (CBK) inflation data shows that the cost of cooking oil has had the sharpest jump among the major food item categories, up by 32 percent between June 2020 and June 2021.
  • The price of beef (with bone) has gone up by 23.6 percent in the period, and that of bread by 20.1 percent.

Higher prices of cooking oil, beef, and bread have pushed food inflation to a 14-month high of 8.8 percent, straining the budgets of households that are already grappling with costly energy.

Twelve-month Central Bank of Kenya (CBK) inflation data shows that the cost of cooking oil has had the sharpest jump among the major food item categories, up by 32 percent between June 2020 and June 2021.

The price of beef (with bone) has gone up by 23.6 percent in the period, and that of bread by 20.1 percent.

The CBK attributed the increase in the cost of cooking oil and bread to higher international prices of palm oil and wheat respectively, partly caused by supply chain constraints due to Covid restrictions in producing countries.

The lower supply of livestock to abattoirs has been the main cause of higher beef prices.

“This is attributed to the increases in imported inputs, for instance, palm oil whose prices has gone up significantly, same case with wheat which has a huge import component,” said CBK governor Patrick Njoroge.

“There are also domestic pressures to month-on-month inflation…affecting items such as sukuma wiki and beef, being pushed by seasonality.”

Palm oil prices, which remained largely stable in the previous five years, recorded a sharp rise in the 12-months to June after Covid-19 lockdowns cut output from plantations in Southeast Asia.

Kenya mainly sources its palm oil imports from Malaysia, whose benchmark palm oil price went up from $649 (Sh70,480) per metric tonne in June 2020 to $1017.50 (Sh110,500) in June 2021.

The higher palm oil price has also seen the prices of alternatives such as animal and vegetable oils go up, partly due to higher demand to fill in the gap caused by lower palm oil production.

Wheat imports have also been affected by similar supply constraints, causing millers to raise the price of flour which has trickled down to bread prices. Upcoming harvests locally should however moderate these prices in the short term.

As a result of the higher food costs, Kenya’s overall inflation rose for the third straight month to hit 6.4 percent in July from 6.3 percent in June. Fuel inflation, which is also a major factor in the cost of living, fell for the fourth straight month to 11.8 percent, helping to mitigate the effect of higher food prices.