Data Hub

Grocery prices go up to new highs amid biting market scarcity

Tomatoes on sale at Muthurwa Market in Nairobi
Tomatoes on sale at Muthurwa Market in Nairobi on February 12, 2020. PHOTO | SILA KIPLAGAT | NATION MEDIA GROUP 
advertisement

Prices of key food and grocery items have shot up sharply over the past few months, adding pressure to household budgets and forcing some to drop them from their consumption basket.

Significant change has been observed in the past three months as prices of several items, including tomatoes and onions rise, in what traders have tied to short supply from local farmers and neighbouring Tanzania and Uganda that put a downward pressure on the prices.

A spot check by Business Daily has shown that a crate of tomatoes at Wakulima market in Nairobi is going for Sh9,000 on wholesale after purchase from farmers at average of Sh8,000.

“A few months ago last year, we would sell the same crate at Sh2,500 or Sh4,000, but there has been cut supply,” a trader, Charles Mwaura said. The market is relying on tomatoes from Loitoktok, Kajiado, Nyahururu, Rumuruti, Nyahururu region which is said to be seasonal, Tanzania and Ethiopia.

Similarly, prices of potatoes have also surged to Sh2,600 per 70 kilogram sack at wholesale markets, from Sh2,200 sold in August, a time also when demand was a muted due to constrained spending by consumers.

Susan Wanjiku, a trader at Wakulima market who buys potatoes from Timboroa, has attributed the rise to high rains experienced in the last quarter of 2019.

The traders at the wholesale markets have also quoted price of onions sourced from Loitoktok, Isinya, Moyale and Chwele in Bungoma and Nyeri at Sh3,500, packaged 40 kgs.

“There was shortage generally accumulated from lack of produce from Ortum in West Pokot that was been affected by floods,” an onion trader, Muchiri Mwangi said.

The prices have surged from a low of Sh1,500 as sold in August and September. The prices of the onions are expected to drop in March, once Tanzania imports increase, currently sold at Sh4,500 at the same market.

The surge in prices of these commodities could see a higher food inflation at the end of first quarter that stood at 9.3 percent in December, up from 8.9 percent in November, according to Central Bank of Kenya (CBK) data.

The rise was attributed to increase in prices of, especially non-vegetable crops, between September and October 2019 (5.9 percent to 8.1 percent), due to heavy rains that caused delays in maize harvests and also ruined crop in the field.

The food supply disruption has been due to the above-average rainfall in the last quarter of 2019, that also saw low-lying areas flooded during the short rains seasons while staple food prices also remain high during the period.

This coupled with shortage from the neighbouring countries where the Kenyan market has been enjoying a significant share of the exports.

Data from the ministry of agriculture showed cooking bananas as at February 10 were sold at an average Sh550 in measure of 22 kilogramme, from Sh500 registered in January 15.

The market prices of carrots in Nairobi have also increased to Sh4,200 per 138 kg from Sh3,800 in January 15.

In a similar period in December, a similar package of cooking bananas and carrots were sold at Sh650 and Sh4,140 respectively.

A tray of eggs have risen to Sh330 as at February, after retailing for Sh300 since November, coming after the trade ministry announced to consider levying duty on poultry products from Uganda, a measure that could be pushing the eggs prices up now. retailing between Sh12 to Sh15, an increase from as low as Sh10 in 2018 and 2019.

The government has also recently heightened surveillance at the borders in order cut down on illegal imports.

The crackdown has so far seen the price of a crate of eggs shoot rise to a high of Sh350 from Sh280 previously.

Other factors that have been pointed to increase the food prices include high oil prices, with CBK reporting fuel inflation at 2.5 percent in December, raising the cost of transportation.

The race in cost of the food items have seen an increase in overall inflation in the country to 5.78 percent in January compared to 4.70 percent in January 2019. The inflation has been high since October recorded at 4.95 percent, 5.56 percent and 5.82 percent in the three months to December 2019.

“Food and Non-Alcoholic Drinks’ Index increased by 0.39 percent between December 2019 and January 2020 mainly driven by increase in prices of some food items outweighing decrease registered in others. For instance, prices of onions, spinach and carrots increased by 5.25, 4.38 and 3.22 percent, respectively. However, during the same period, prices of green grams and cooking fat dropped by 0.99 percent and 0.36 percent, respectively,” the Kenya National Bureau of Statistics stated in the January’s inflation rate report.

Analysts have, however, showed optimism on the prices, saying the inflation would be reverted with expected normal rains in the next quartets while the subdued global oil demand help curb upward pressure on the commodity price.

“We anticipate food inflation to mean-revert to historic two-year levels of approximately 4.0 percent from the 9.0 percent recent highs at the close of 2019,” Genghis Capital analysts said.

advertisement