Kenya’s Inflation Quickens to 8.5% y/y in August
Kenya’s headline consumer inflation quickened to 8.5% in August from 8.3% in July, driven by higher food prices.
This is the third month the inflation rate is outside the government’s targeted band of 2.5% to 7.5%.
“The rise in inflation was mainly due to an increase in prices of commodities under food and non-alcoholic beverages (15.3%); transport (7.6%), and housing, water, electricity, gas and other fuels (5.6%) between August 2021 and August 2022,” the Kenya National Bureau of Statistics (KNBS) said in a statement.
During the review period, month-on-month fuel prices were unchanged, supported by an extension of the fuel price subsidy.
“Expectations of another failed rainy season (Oct-Dec) should undermine crop production, while a prolonged war in Ukraine should result in shortages of key raw materials. Overall, risks to the food inflation outlook are tilted to the upside, “analysts from NCBA stated.
“The question is whether the tenacious rise in inflation is sufficient to nudge the central bank of Kenya (CBK) to resume its monetary policy tightening cycle following the ‘pause’ in its last meeting. We continue to see scope for an additional 75bps policy rate (CBR) hike before the end of 2022.”