New measurement cuts inflation to 6.6 per cent
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By JACKSON OKOTH The Kenya National Bureau of Statistics (KNBS) has announced new overall inflation figures for the month of October, indicating a drop to 6.6 per cent, compared to 6.7 per cent in September. These figures are based on a new measurement regime by the bureau, which uses the geometric mean. The old methodology would have yielded an October inflation of 17.5 per cent. "Over the years, KNBS has been releasing the consumer price index and inflation figures based on arithmetic mean computation method. However, this approach has been found not to be robust in the sense that it is influenced by outliers," said Antony Kilele, Director General, KNBS. He made the remarks yesterday at the Treasury, at a function also attended by top bureaucrats from the planning and finance ministry, as well as officials from the World Bank and International Monetary Fund. In October, food and non-alcoholic drinks index went up by 0.55 per cent, thanks to a rise in the price of English potatoes, beans, cabbages, beef with bones and sugar, among other food items. However, there were notable falls in the price of sifted maize flour, tomatoes, onions and loose grains. Fuel and power index increased by 0.95 per cent, mainly due to increase in the cost of electricity, paraffin and charcoal. Lagging behind Based on this new computation, overall inflation moved from 13.3 per cent in January, to 14.6 per cent in March, before falling to 9.6 per cent in May, 7.3 per cent in August and to 6.6 per cent in October. Kenya has been lagging behind Uganda and Tanzania, both of which are already on the geometric mean. "Kenya has been negatively affected as an investment destination due to a signaling mechanism which was not accurate," said Professor Njuguna Ndung’u, CBK governor. A review of the method used in computing inflation comes as the country recovers from the effects of high inflation, arising from supply side factors, caused by several shocks. These shocks include volatile oil prices, commodity prices and drought conditions, which continue to pose a challenge to the achievement of CBK’s core mandate of price stability.