Kenya’s headline inflation rate climbed to 6.6% in August, up from 6.5% in July, marking the fifth straight month that price growth has sat above the midpoint of the central bank’s target range. The Kenya National Bureau of Statistics released the figures on Monday, showing consumer prices rose 0.4% between July and August, compared with a 0.2% rise the month before.
The reading still falls within the Central Bank of Kenya’s target band of 2.5% to 7.5%, but it sits well above the 5% midpoint policymakers aim for. That gap has now persisted since spring, and August’s numbers suggest the pressure driving it has not eased.
Transport and Fuel Costs Lead the Increase
Transport costs rose 15.7% year on year, the single biggest contributor to August’s inflation figure. Renewed conflict in the Middle East pushed global oil prices higher through the month, and those costs worked their way into fuel prices and transport fares across the country.
Khusoko’s earlier coverage of the fuel market found that a temporary VAT cut and a government subsidy from the Petroleum Development Levy Fund had kept pump prices flat through July and into August, even as global markets stayed volatile. That relief has a limited shelf life, and the transport figures in this latest inflation report show how quickly costs can move once external shocks reach consumers.
Food and non-alcoholic beverages rose 9.0% year on year, while housing, water, electricity, gas and other fuels climbed 3.6%. Together, these three categories make up more than 57% of the CPI basket, giving them outsized weight in the headline number.
Core Inflation Points to Persistent Pressure
Core inflation, which strips out volatile items like fuel and fresh food, accelerated to 3.4% from 3.2% in July. Non-core inflation, which captures those more erratic categories, eased slightly to 14.7% from 15.0%.
That split matters. When core inflation rises while non-core inflation cools, it suggests the latest pickup is coming from underlying, sticky cost pressures rather than short term swings in a handful of volatile goods. Economists watch this divide closely because core inflation tends to be harder to reverse once it takes hold.
The consumer price index itself climbed from 155.20 in July to 155.85 in August, confirming the 0.4% monthly gain.
Some Prices Fell Even as the Headline Rose
Not every category moved in the same direction. Sifted maize flour fell 2.7% month on month, tomatoes dropped 2.2%, and diesel eased by roughly Sh5 a litre, a decline of about 2.2%.
Those declines show that August’s overall increase was concentrated in transport and a small set of categories rather than spread evenly across the economy. For households, that distinction can be cold comfort if fares and staple food costs are the ones climbing.
Central Bank Holds Rates Steady
The Central Bank of Kenya has kept its benchmark rate at 8.75% since April, following ten consecutive cuts that began in August 2024. Governor Kamau Thugge and the Monetary Policy Committee held the rate for a third straight sitting in August, saying the current stance remains appropriate to keep inflation expectations anchored within the target range, according to Khusoko’s reporting on the committee’s August meeting.
Policymakers eased rates through much of the past two years as inflation cooled from the highs seen in 2023. But with price growth now climbing rather than falling, the committee has less room to cut further without risking a rebound.
Some bank research suggests relief may still be ahead. NCBA’s half year 2026 market outlook projected headline inflation averaging between 6.0% and 6.5% in the third quarter, assuming diplomatic progress between Iran and the United States, a holding ceasefire between Israel and Lebanon, and Gulf producers rerouting more oil through pipelines to push Brent crude toward $70 a barrel. August’s 6.6% reading sits just above that projected range.
What It Means Going Forward
The Kenyan shilling has stayed relatively stable this year, which has helped limit imported inflation. But the country still imports the bulk of its fuel, leaving it exposed to swings in global oil prices whenever geopolitical tensions flare.
That leaves policymakers with a narrowing path. They need to support economic growth without letting elevated food and energy costs settle into the kind of entrenched inflation that is far harder to unwind. August’s numbers suggest that balancing act is getting more difficult, not less.
