The price of the 2kg packet of maize flour has risen to a historic high of Sh153.
The rise sets the stage for an increase in inflationary pressure, despite Treasury secretary Henry Rotich’s attempt to ease it through tax cuts last week.
This is the first time in Kenya that the price of the 2kg packet has touched Sh153 — going past the 2011 peak of Sh150 that forced the government to introduce a raft of measures aimed at reversing the trend.
The latest price surge has been attributed to a shortage of maize that has seen a 90 kilogramme bag sell at a record high price of Sh4,500 from Sh3,800 at the end of last year.
“This is the first time in my milling career of over 20 years that I have seen both the price of maize and flour rise to a historic high,” said Nick Hutchinson, who chairs the Cereal Millers Association.
The 2kg packet of Soko, Ndovu and Jogo maize flour brands was Monday retailing at Sh153, Sh151 and Sh147 respectively in Tuskys Supermarkets.
Cheap maize from Mexico is expected to land in the country this month to help curb the rising cost of flour, government authorities said.
The Treasury last week scrapped the 50 per cent duty levied on maize imported from outside the East African Community in the next four months to lower the cost of importing the staple.
Agriculture secretary Willy Bett said all the logistics involving importation of the maize by the private sector were finalised last week and traders are now free to bring in the grain.
“Once this maize arrives, the high prices will be a thing of the past,” said Mr Bett.
Mexico is self-sufficient in white maize and produces an excess of two million tonnes a year, according to Bodduppali Prasanna, a director at the International Maize and Wheat Improvement Centre.
Mr Prasanna said white maize is currently selling at Sh2,000 ($20) per 90kg bag in Mexico before adding the shipping cost, estimated at about Sh1,500.
Kenya is also expecting maize from Ethiopia, which the Cabinet Secretary said started arriving Monday.
The consignment is being shipped in at a price of Sh4,300 per 90kg bag.
Kenya is among East African states that last month secured a deal to buy Ethiopian maize at an estimated price of Sh5.5 billion to ease the current maize shortage.
High cost of food saw inflation jump to 10.28 in March from 9.04 the previous month, taking it beyond the Treasury’s preferred upper limit of 7.5 per cent.
Food and non-alcoholic drinks’ index rose 3.18 per cent driven by a steep increase in prices of food items such as spinach, maize flour, milk, potatoes and maize grain, according to the Kenya National Bureau of Statistics.
Food takes up the largest share (36 per cent) of the basket of goods used to calculate inflation, making it the main driver of the cost of living.
The Central Bank of Kenya’s monetary policy committee (MPC) expects inflation to stay outside the preferred range in the near term.
Other food items whose prices have been rising fast are the 500ml packet of milk that is currently retailing at Sh56 from Sh53 during the same period last year.
Rice, another staple in Kenya, has also risen to sell at Sh113 from Sh101 in the corresponding period last year.
Rice and sugar
Retailers said the ongoing drought that has seen production in major irrigation schemes drop by more than a half, from 150,000 tonnes to 70,000 annually, is to blame for the rise in rice prices.
The price of sugar has continued to rise, taking the 2kg packet to Sh300.
The high cost of living has eroded the purchasing power of low-income households that spend a large fraction of their income on food.
The pain is expected to be deeper this time round given the recent research finding that employers have put salary increments on hold.
The job market survey, conducted by Corporate Staffing Services using data from the Institute of Human Resource Management (IHRM), found that 73 per cent of employers across 12 sectors have stopped new hiring.
More than 57 per cent of the firms also indicated that they will not increase employees’ pay this year while the remaining 43 per cent will marginally adjust salaries to compensate for inflation.