Economy
May inflation could rise to 8 percent due to higher food and energy costs
Wednesday, May 31, 2023
Packets of sugar are sold at Naivas supermarket, Nairobi on May 16, 2023. Image | Ponce Bogeta | NMG
A measure of the cost of living rose slightly in May, by 0.1 percent, due to higher food, energy and transportation costs.
The inflation rate has stabilized at 8 percent from 7.9 percent in April, when it fell to a 10-month low at the start of the rains.
According to data from the Kenya National Bureau of Statistics (KNBS), price changes in food, energy and transport, which cover about 57 percent of household budgets, peaked at 10.2 percent, 9.7 percent and 10.1 percent, respectively.
Housing, water, electricity, gas and other fuels that make up the energy and transport index were driven by an increase in the cost of petroleum products, with petrol, diesel and kerosene averaging Sh183.29, Sh169.10. and 161.83 shillings per liter nationwide.
Exacerbated by higher sugar costs on the food and non-alcoholic beverage index, they rose 49.2 percent year-on-year and 22.1 percent month-on-month, with an average kilogram of sweetener in May of 194.29 in May from 159.10 in April.
is reading: Sugar prices rise as stocks fall
Other foodstuffs that recorded notable monthly price increases include beans, corn, carrots, potatoes, rice and wheat flour.
Prices of vegetables, including turnips, tomatoes and onions, fell.
The cost of sugar was affected by the domestic shortage of sugar cane, which prompted the government to open a new duty-free import window to support consumers in a move that is expected to check additional price increases for the sweetener.
Monetary policy
Inflation remains hovering outside the government’s range of 2.5 percent to 7.5 percent since the upper limit was breached in June last year.
But the Central Bank of Kenya (CBK), whose job also includes keeping inflation in check through monetary policy, has shifted the cost of living downward into the target zone for a recovery in agricultural production this year and incentives to tackle food shortages such as duty-free import windows.
As such, the Monetary Policy Committee of the Central Bank of Kuwait left the benchmark lending rate unchanged at 9.5 percent earlier this week, noting that the effects of the policy stance are still filtering into the economy.
“The committee noted that the impact of further tightening of monetary policy in March 2023 to anchor inflationary expectations is still being transmitted through the economy,” the Central Bank of Kuwait said on Monday.
In addition, the Monetary Policy Committee indicated that this measure will be complemented by the recently announced government measures to allow duty-free imports of certain foodstuffs, especially sugar, which is expected to moderate prices and ease domestic inflationary pressures.
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