Rise in Fuel and Food Prices Push August Inflation to 5.7opc

Kenya’s inflation in September rose to a 10-month high of 5.7 percent from 4.04 percent a month earlier as a result of rising fuel, transport, and food prices, the Kenya National Bureau of Statistics said on Friday.
“This was mainly on account of increase in the pump prices of petrol and diesel which triggered an increase in prices of other transport components,” said KNBS in a statement.
On a monthly basis, inflation was 1.02 percent from 0.31 percent in August.
The Transport Index rose 7.99 percent from a month earlier and was up 17.29 percent when compared with September 2017 due to increased petrol and diesel prices.
The Central Bank of Kenya expects inflation to remain within the government’s preferred band of 2.5-7.5 percent due to lower food prices reflecting favorable weather despite the introduction of the new tax.
Analysts are, however, of the view that the second round effects could push prices towards the upper limit of the central bank target although muted food price inflation could still keep inflation within the target. The pressure may be aggravated by rising oil prices.
“This should invite some caution by the regulator in the near term. Even then, should the effects of these tax increases prove temporary and oil price increases untenable, as in most cost-push scenarios, then the MPC could consider signaling further accommodation to help bolster sentiment in credit markets. This may, however, be delayed towards the end of the year or next year. ,” Stephanie Kimani and Faith Atiti observe.