Kenya Inflation Eases to 5.39pc in January on Lower Electricity Costs

Prices of food items in January 2022 were relatively high compared with prices of food items recorded in January 2021,

A fruit seller in one of Kenya's informal markets

Kenya’s inflation declined to 5.39 per cent in January, mainly due to lower electricity and transport costs, according to government data released on Monday.

The Consumer Price Index-based (CPI) inflation was at 5.39 per cent in January compared to 5.73 per cent in December 2021 the Kenya National Bureau of Statistics said.

As per the data released by the KNBS, the CPI increased by 0.31 per cent from an index of 118.274 in December 2021 to 118.642 in January 2022 with the month-to-month Food and Non-Alcoholic Beverages Index increasing by 1.07 per cent between December 2021 and January 2022.

During the month, power bills dropped by 15 per cent with households consuming 50KwH spending Sh796.85 down from Sh852.26.

The transport index decreased by 0.11 per cent as there was no change in prices of petrol and diesel.

However, “Prices of food items in January 2022 were relatively high compared with prices of food items recorded in January 2021,” KNBS said.

For instance, prices of maize flour-sifted, kale sukuma wiki, spinach and Irish potatoes increased by 6.41, 5.69, 5.66 and 3.87 in January 2022, respectively. Moreover, prices of mangoes, tomatoes and carrots decreased by 3.98, 0.65 and 0.07 per cent, respectively. 

The Central Bank of Kenya (CBK) has projected the CPI inflation expectations to remain well-anchored within the target range (+5% – 7.5%), with muted demand pressures and the impact of Government measures to lower electricity tariffs and stabilize fuel prices. 

Genghis Capital on the other hand remains cautious, given crude oil prices reached a 7 year high of USD 90.0 per barrel during the week spurred by heightened geopolitical risks, constrained supply and robust supply.

“In light of these developments, we believe that the price stabilisation mechanism’s sustainability is at great risk,” they noted.

“International crude prices expected to rebound and this along with a weakening shilling will result in higher pump and food prices as well as transport costs.  We do not foresee a significant increase in inflationary pressure as monetary policy will focus on containing inflationary pressure,” Sterling Capital Analysts say in their 2022 Kenya Economic Outlook.

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