Market News

Kenya not yet out of the woods over high food prices


A grocery trader at Nyeri’s Chaka market. PHOTO | JOSEPH KANYI

The prices of basic consumer goods hit record highs as drought ravaged the country in the first quarter of the ending year, sharply cutting purchasing power of majority Kenyans.

Maize, sugar, rice and milk are some of the basics that recorded high prices subjecting consumers to high cost of living.

The high cost raw material pushed the cost of maize flour staple to an historic high of Sh153 per two kilogramme (kg) packet triggering rise of inflation.

Food is a key driver of cost of living and rose from February only to ease in July after the government introduced a subsidy programme.

A 90kg bag of maize cost Sh6,000 in April, a price that millers said was an historic high.

The government was forced to intervene through subsidy to lower the cost of a 2kg packet to Sh90 through injection of Sh6 billion.

Tegemeo Institute of Policy and Research said Kenya is not yet out of the woods and will require to import as early as May.

“With erratic rains and armyworm invasion this year, there could be a shortage of maize in the country next year and the imports would have to start as early as May,” it said.

The Ministry of Agriculture has projected a decline of about eight million bags in production this year.

READ: Kenya faces costly maize imports from April 2018

On the other hand, the cost of sugar hit a high of Sh400 per 2kg , marking the highest price consumers have ever paid in a decade.

The high cost was precipitated by a shortage of sugarcane lowering production in factories with nearly all of them operating below capacity.

According to Kenya National Bureau of Statistics (KNBS), sugar production in September stood at 21,649 tonnes against 53,000 tonnes registered in January.

Sugar directorate estimated a shortage of 1.9 million tonnes at the end of last financial year.

The shortage saw Treasury scrap duty on sugar outside the Common Market for Eastern and Southern Africa allowing traders to bring in up to 900,000 tonnes of the sweetener as of last month.

The imports will influence the market in 2018 with shortage of raw material.

Rice price shot up to Sh200 from Sh120. The price, however, dropped 40 per cent to Sh120 this month on the onset of harvesting at the Mwea scheme.