CBK Governor Prof Njuguna Ndung’u cited stability in the overall inflation as a key reason for holding  Central Bank Rate unchanged for the seventh consecutive time.

By JAMES ANYANZWA AND MACHARIA KAMAU

NAIROBI, KENYA: The cost of living went up slightly in April following a rise in prices of most goods and services as inflation rate rose to 6.41 per cent from 6.27 per cent in March.

However, this was not enough to make Central Bank change its benchmark-lending rate.

The banking sector regulator retained commercial banks at 8.5 per cent, underscoring the need to continue managing inflationary expectations and to sustain price stability. It cited stability in the overall inflation and stability in the exchange rate as key reasons for holding its Central Bank Rate (CBR) unchanged for the seventh consecutive time in a row.

 The bank’s monetary policy committee (MPC) pointed out that confidence in the economy remained strong while the banking sector remained solvent and resilient.

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“The monetary policy measures had continued to deliver the desired price stability,” said Njuguna Ndung’u, the governor of Central Bank and the committee’s chairman. “The monetary policy path remains credible despite the slight rise in overall inflation,” he added.

COST OF COMMODITIES

Data from the Kenya National Bureau of Statistics (KNBS) shows a rise in the cost of most of the commodities that are factored when computing the rate of inflation.

The areas that experienced significant spikes in pricing include food, transport due to a rise in cost of fuel and household fuels, including charcoal and cooking gas.

The cost of almost all food items were on the rise, with the Food and Non-Alcoholic Drinks’ Index going up by 1.66 per cent. Food is the largest component in the consumer price inflation basket, accounting for 36 per cent of the CPI weight.

“The rise in the food index came as a result of the prices of more food items recording increases compared to those whose prices decreased,” said KNBS.

Price of cooking gas has in the recent past gone up to retail at between Sh3,100 and Sh3,500 depending on outlets and location.

COOKING FUELS

“Between March and April 2014, housing, water, electricity, gas and other fuels’ index increased by 0.33 per cent.  This was mainly due to observed higher costs of common cooking fuels including charcoal, firewood and gas.

The cost of electricity consumption reduced slightly compared to last month, on account of forex charges dropping by 5 cents per KWh in April 2014,” said the statistics bureau.