Kenya's inflation drops to 35 month low at five per cent

Kenya’s May inflation hit a 35 month low of five per cent to stay within government’s target, latest data from Kenya National Bureau of Statistics (KNBS) show.

This is a marginal ease from last month when it averaged 5.27 per cent, down from 6.45 per cent recorded in March. This figure is the lowest since June 2013 when inflation touched 4.91 per cent.

However, despite the ease, consumer price index (CPI) which measures changes in the prices of selected consumer goods and services purchased by households went up by 0.68 per cent from to 167.99. The increase in the price was due to an overall rise in all the broad food groups that make up the food basket to determine the CPI levels.

There was a rise in the cost of food and no-alcoholic beverages, which accounts for over 36 per cent of the food basket in consideration. Compared with a similar period last year, the cost of such items has increased by 6.58 per cent.

“Between April and May 2016, food and non-alcoholic drinks’ index increased by 0.82 per cent as a result of notable increases in prices of several food items, which outweighed the decreases,” noted KNBS Director General Zachary Mwangi.

Average retail prices for selected commodities also showed that kerosene dropped the most recording a 6.7 per cent fall from April’s price of Sh47.96 to Sh44.94.

Other notable month-on-month price eases were green maize (6.6 per cent to Sh26.75) and diesel from Sh71.34 to Sh67.21 per litre. However, the prices of cooking oil and cooking gas rose by less than one per cent to Sh228.16 and Sh2,252.86 respectively.

The cost of electricity remained unchanged. Compared to a similar time last year, tomatoes have had the biggest rise in price (35.4 per cent) while the biggest drop has been kerosene (20.3 per cent).

The price changes were generated using data collected during the second and third weeks of May. They were obtained from selected retail outlets in 25 data collection zones located in Nairobi and 13 other urban centers.

Policy makers will be delighted since at the current level, inflation rate is inside comfortable range and within the country’s target limit of between 2.5 per cent and 7.5 per cent.