Kenya October inflation declines by 0.2pct against expectations

Kenya’s inflation rate for the month of October marginally declined to 5.5% from 5.7% recorded in September attributed to a reduced food, non-alcoholic and transport index according to the statistics body.
On Wednesday, the Kenya National Bureau of Statistics noted that the 1.8% decline in the food and non-alcoholic beverages index was mainly due to lower prices of maize and maize products compared to September.
“The price of a 2kg packet of sifted maize flour dropped by 14.4% from an average of Ksh 97.88 in September to 83.83 in October. During the same period, prices of various vegetables were lower…the year on year food inflation was 0.52% in October,” said Zachary Mwangi, Director General, KNBS.
Consequently, the 0.9% decline in the transport index was due to a 0.9% drop in average petrol prices.
“This was against broader expectations of accelerated pressure due to recent tax measures,” noted Faith Atiti and Stephanie Kimani, CBA Group Economic Analysts.
Earlier, they had said inflation would rise further as effects of new taxes become more apparent, but the fairly low food prices could still keep it below the upper limit of the inflation target at ‘about 7.0%’.
However, “Benign food inflation outlook could in the near term partly offset the lagged effects of higher international oil prices and the 8.0% VAT on fuel.”
“Even then, as a potential pressure point, we continue to monitor the shilling which has lost 1.1% in the last one week.”