Rising food and fuel prices lift inflation to four-year high

Expensive food and fuel lifted Inflation to a four year high last month as the cost of living measure rose above the government’s target for the first time since January last year.

Inflation jumped to 9.04 per cent in February from 6.99 per cent a month earlier, data from the Kenya National Bureau of Statistics (KNBS) shows.

“Over the review period, food and non-alcoholic drinks’ index increased by 3.28 per cent. This was mainly attributed to increases in prices of sukuma wiki, maize flour, milk, cabbages, spinach, potatoes and maize grain among others,” the bureau said, citing the prevailing drought conditions.

“The transport index increased by 0.74 per cent in February compared to January, mainly on account of increases in the pump prices of petrol and diesel.”

Diesel hit a 26-month high mid-February after the energy regulator adjusted the prices to match rising global oil prices.

Diesel is retailing at Sh90.2 from Sh68.9 a year ago while kerosene went up 67.9 per cent to Sh68.20.

Food, energy and transport costs have a significant weighting in the basket of goods and services used to measure inflation, making them main driver of the cost of living measure.

The food crisis is underlined by inflation moving outside the government preferred range of 2.5-7.5 per cent in the medium term. 

The rally in food prices saw annual food inflation hit a high of 16.50 per cent.

Kenya declared drought a national disaster on February 10, calling for aid to counter drought that is posing a major risk to people, livestock and wildlife.

The Kenya Red Cross has estimated around 2.7 million people are in need of food aid after low rainfall in October and November and the next rainy season not due before April.

The food crisis has prompted a review of the national budget with the Treasury cutting further project spending to free Sh6.9 billion for drought mitigation.

The KNBS data shows that a two-kilogramme packet of the staple maize flour was up Sh7 to an average of Sh126 in the month to February, and up from Sh105 same month last year.

A kilo of sukuma wiki rose to Sh54 from Sh36.8 over the past year while a similar quantity of cabbages rose by Sh26 to Sh74.8 over the period.
The rise in food prices has wrecked household budgets.

Consumers also had to contend with rising power bills in February following an increase in the forex levy to a 15-month high in February as a result of the weakening of the Kenya shilling against the US dollar.