Kenya’s inflation hits 4-year low despite high commodity prices

Kenya’s annual inflation defied the rise in prices of transport, housing and some food commodities and utilities to drop to a four-year low in June, latest data by the Kenya National Bureau of Statistics indicate.

Consumer prices rose an annual 4.6 per cent in June, from 5.1 per cent reported in the month of May, and was the lowest rate since September 2020.

According to KNBS, the rise in these indices did not affect overall inflation rate, providing some respite to consumers who have become increasingly frustrated by the high cost of living.

“Overall year-on-year (annual) inflation rate as measured by the Consumer Price Index (CPI) was 4.6 per cent, in June 2024, with a monthly inflation rate of 0.4 per cent. The annual inflation rate for May 2024 was 5.1 per cent,” reads the KNBS report.

The rise in annual inflation was mainly due to an increase in prices of commodities under the classification of individual consumption by purpose (COICOP) divisions.

The government has a preferred range for inflation of between 2.5 per cent and 7.5 per cent in the medium term.

The price increase was mainly driven by rise in prices of commodities under transport which increased by 7.7 per cent, food and non-alcoholic beverages (5.6 per cent) and housing, water, electricity, gas and other fuels (3.1 per cent), between June 2023 and June 2024.

These three divisions account for over 57 per cent of the weights of the 13 broad categories. The inflation rate was 5.0 per cent in May 2024.

In the period under review, a kilogramme of sugar dropped by Sh4 to Sh168.6, while that of sifted maize flour went down by Sh3 to Sh135.

A litre of cooking oil prices also recorded a Sh2 drop to Sh326 from an average of Sh328 that was recorded in May.

The prices of a standard single room in the city averaged Sh4,102, a marginal rise from the Sh4,101 a month earlier.

However, electricity posted the largest change in power prices averaging Sh44 more in June, compared to May.

This in turn saw Kenyans pay Sh1,321 in June up from the Sh1,277 for a 50kWh of electricity.

In particular, prices of cabbage, spinach and Kale (sukuma-wiki) increased by 14.8, 11.3 and 10.7 per cent, respectively, between May 2024 and June 2024.

Conversely, prices of oranges, sugar, maize flour- sifted dropped by 2.5, 2.4 and 2.0 per cent, respectively between May 2024 and June 2024.

The housing, water, electricity, gas and other fuels’ index increased by 0.4 per cent between May 2024 and June 2024, mainly due to rise in prices of 200 kWh and 50 kWh of electricity by 2.9 per cent and 3.4 per cent, respectively.

This was in spite of a drop in the prices of gas/LPG and kerosene by 0.3 per cent and 3.4 per cent, respectively, during the period.

The transport index dropped by 0.2 per cent between May 2024 and June 2024, mainly due to decrease in prices of petrol and diesel by 1.6 per cent and 3.4 per cent, respectively.

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