Maize prices have failed to return to levels witnessed during previous harvest seasons, setting the stage for expensive flour as millers exhaust cheap grains following the end of five-month import subsidy.
Kenya National Bureau of Statistics (KNBS) data show that a kilo of maize retailed averagely at Sh56.80 end of October compared to Sh43.98 the same month last year.
Western and parts of Rift Valley started harvesting maize from September in a period when the crop has averaged between Sh42 and Sh44 based on previous KNBS data.
Traders reckon a kilo of maize in markets is unlikely to drop below Sh50 this year on increased demand following the end of the subsidy and the higher government purchase price. The government will buy a bag from farmers at Sh3,200 for National Cereals and Produce Board stocks.
Millers say they will get a bag at Sh3,400 when transport costs are factored in. But market traders who sell in small quantities of a kilo or two say they expect to sell a bag at about Sh4,500 after including their profits.
This signals expensive flour with the end of the import subsidy that kept the cost of the two-kilogramme packet of the staple food at Sh90 from a high of Sh153 in April.
Millers say they will raise the cost of flour to about Sh120 once they exhaust the subsidised maize over the next two weeks.
This looks to put pressure on inflation, which fell to a 16 month low of 5.72 per cent in October, pushed by a fall in some food prices.