The decline of the shilling is likely to lead to imported inflation where the prices of goods may rise as traders need more local currency to buy imports pilling pressure on fuel prices, vehicle imports, food and beverages consumer goods and industrial supplies.
“Commercial banks quoted the shilling at 111.30/50 per dollar, compared with Tuesday's close of 111.25/45. Traders said it was forecast to weaken due to demand especially from the manufacturing sector and scant inflows to match,” Reuters reported.
Kenya’s inflation has risen close to the upper limit touching 6.91 percent in September before retreating to 6.45 percent year-on-year in October.
Higher inflation has mainly been driven by a series of new tax measures, higher food prices and the cost of imports especially oil prices make up 16.3 per cent of the import bill at Sh190 billion in the seven months to July.