Kenya’s inflation edged up slightly in October due to higher food prices and fuel costs, remaining within the Central Bank’s 5.0 percent medium target.
The Kenya National Bureau of Statistics on Friday said the country’s overall year-on-year inflation increased to 4.84 percent in October from 4.2 percent last month. This was a four month high.
Month-on-month food and non-alcoholic drinks’ index increased by 1.14 percent in October, while year-on-year food inflation increased by 5.76 percent.
Housing, water, electricity, gas, and other fuels’ index increased by 0.94 percent attributed to an increase in the cost of cooking fuels.
The cost of 200KwH of electricity increased by 3.15 percent while that of kerosene went up by 0.69 percent.
The transport index increased by 0.62 percent mainly due to a rise in the price of petrol by 1.72 percent, which overweighed the decrease of 1.68 percent in the price of diesel. The Energy and Petroleum Regulatory Authority raised the price of fuel following the Kenya Revenue Authority’s move to adjust upwards the Excise Duty on Super Petrol, Diesel, and Kerosene.
The excise duty adjustment is in line with the annual inflation rate across the 2019/20 financial year to June 30 and affects the supply of 31 products including cigarettes, fruit juices, wines & spirits and some chocolates.
Market Analysts expect the monetary policy committee (MPC) to maintain a dovish path as the need to plug the output gap increases.
“This will be supported by muted demand pressures in the economy which should hold uphold inflation within the statutory target band,” according to NCBA Analysts.