Kenya Economists See December Inflation Rising on Transport and Food Cost 

Inflation Dropped 4.36 pct in July On Cheap Food and Housing Cost

Stability of prices is an important indicator of a stable macroeconomic environment

Inflation will likely inch up or fall in December according to various market analysts in Kenya who have projected mixed inflation rates.

In November, inflation stood at 5.56 percent up from 4.95 percent in October, due to a rise in the cost of some foodstuff, the Kenya National Bureau of Statistics said. The consumer price index rose to 202.94 in November from 202.12 in October. The food and non-alcoholic drinks index rose by 0.62 percent due to a growth in prices of some foodstuffs outweighing the drop in others. Equally, housing, water, electricity, gas, and other fuels index rose by 0.29 percent.


Kenya’s consumer price index (CPI) basket of goods and services is classified into 12 groups: food and non-alcoholic beverages; alcoholic beverages, tobacco and narcotics; clothing and footwear; housing, water, electricity, gas and other fuels; furnishings, household equipment and routine household maintenance; health; transport; communication; recreation and culture; education; restaurants and hotels; miscellaneous goods and services.

Genghis Capital 

December inflation rate (y/y) which we estimate at 5.80% – 6.00%. Inflation has averaged 5.1% in 11M19 and we expect slight uptick attributed to food supply chain disruption from the recent heavy downpour coupled with the cyclical high spending in the festive period.

Source: Genghis Weekly Strategy 30th Dec. 2019

Cytonn Investments

We are projecting the Y/Y inflation rate for the month of December to come in within the range of 4.8% – 5.2%, compared to 5.6% recorded in November. 

The Y/Y inflation for the month of December is expected to fall due to the base effect. 

The month-on-month inflation rate (M/M) inflation is however expected to rise driven by:

An increase in the food and non-alcoholic beverages index, which has a weighting of 36.0%, mainly driven by the higher food prices especially vegetable prices with the highest rise recorded in tomato prices.

Despite the 1.0% and 2.7% declines recorded in petrol and diesel prices to Kshs 109.5 and Kshs 101.8 from Kshs 110.6 and Kshs 104.6, recorded in November, respectively, we still expect the transport index to be on the rise due to an increase in local and international flight charges as well as bus and matatu fares due to increased demand associated with Christmas festivities.

Future inflation, Cytonn Investments says it is likely to stay within the target range of 2.5% – 7.5% in 2020.

Source: Cytonn Weekly #51 Dec 22, 2019


Markets are baking in higher inflation expectations amid prospects of food shortages, higher fuel prices and to a lesser extent, some pick up in demand pressure driven by recovery in private sector lending and ongoing settlement of pending bills by the National and County governments.


December CPI data scheduled for publication on the last day of 2019 could show continued build-up in inflationary pressure. Heavy rains have been mostly destructive, especially for short term fruits and vegetables.

This could offset the impact of relatively soft price pressures on cereals. Even then we expect inflation to remain around the November level of 5.6% as a higher base dilutes some of the aforementioned risks.

An acceleration beyond 5.6% could enhance the defensive trading on bonds, pushing prices further up. Inflation which had been relegated as a major leading indicator for interest rates by interest rate cap will once again be consequential for interest-rate guidance in the current interest rate regime.

Source: NCBA Weekly Fixed income Report Dec.31, 2019