Market News

Firms forecast jump in October inflation on business return

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Central Bank of Kenya (CBK). FILE PHOTO | NMG

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Summary

  • The survey was carried out ahead of the September 29 Monetary Policy Committee meeting, polling CEOs and other senior officers of the 39 licenced banks, 14 MFBs and 328 non-bank private firms including 63 hotels.
  • The polled institutions said that inflation will remain firmly within the preferred band of five percent plus or minus 2.5 percentage points, citing subdued demand pressure, low food and global oil prices.

Private sector firms and banks expect inflation to rise slightly above its one-year low by the end of this month, on the back of increased demand as economic activity picks up following easing of Covid-19 prevention restrictions.

The periodic markets perceptions survey done by Central Bank of Kenya (CBK) on commercial banks, microfinance banks (MFBs) and non-bank private firms found that they expect inflation in the September-October period to come in at between 4.6 percent (banks and MFBs) and 4.8 percent (non-bank firms).

The survey was carried out ahead of the September 29 Monetary Policy Committee meeting, polling CEOs and other senior officers of the 39 licenced banks, 14 MFBs and 328 non-bank private firms including 63 hotels.

The polled institutions said that inflation will remain firmly within the preferred band of five percent plus or minus 2.5 percentage points, citing subdued demand pressure, low food and global oil prices.

“However, respondents expected some upward pressure on inflation mainly through increased demand due to economic activity, higher demand for fuel, and costs of production and transport,” said CBK in the survey report.

Last month, the cost of living went up by 4.2 percent, down from 4.36 percent in August as food, fuel and rent prices went down.

This was coupled with low core inflation—that has fallen below two percent—as the purchasing power of Kenyans remains hindered by the negative effects of the Covid pandemic on the economy.