Relief as Kenyans pay less for basic items

 

A drastic fall in the prices of Irish potatoes helped relieve the cost of living for Kenyans in July as inflation moved towards the Central Bank’s (CBK) targets.

According to the latest figures by the Kenya National Bureau of Statistics (KNBS), inflation stood at 7.47 per cent, down from 9.21 per cent in June.

The fall in the price of Irish potatoes, the major ingredient for French fries and also used for making an assortment of meals in many households, was the biggest contributor in the general reduction in the country’s food basket. The drop in inflation will also come as a big relief to CBK as it is now within its 7.5 per cent and 2.5 per cent target band.

The regulator has been unable to counter the rise in inflation using monetary policy tools, since the current spike is largely driven by food prices, which cannot be corrected by raising interest rates.

During the period under review, the price of a kilo of potatoes fell by 21 per cent from Sh72 a kilo in June to Sh56 a kilo last month.

“Between June and July, food and non-alcoholic drinks index decreased by 2.05 per cent,” said KNBS Director-General Zachary Mwangi in a statement.

“The drop was caused by a significant fall in prices in several food items arising out of good weather conditions in some parts of the country as well as the Government’s interventions aimed at bringing down the cost of staple food items,” he added.

The cost of living went through the roof in May, with inflation hitting a five-year high of 11.7 per cent. This was mainly driven by food prices after the country failed to prepare for effects of drought that disrupted agriculture late last year. This forced the Government into action to stem the runaway inflation by levying duty on maize, milk powder and sugar to encourage imports.

In May, sugar was retailing at Sh168 a kilo, but has now come down to Sh150 a kilo in two months. Sifted maize flour was Sh129.6 per 2kg packet in May, but tapered to Sh116.5 in July.

Kales (sukuma wiki), cabbages and onions have also experienced a price dip, bringing relief to the common mwananchi.

The prices of wheat flour, however, increased marginally as a trade tiff escalated that saw Kenya ban the importation of wheat from Tanzania.

During the period under review, the cost of transport was brought down by the stability in pump prices while the cost of energy, water and housing remained relatively muted. “During the month under review, housing, water, electricity, gas and other fuels index decreased by 0.08 per cent,” said Mr Mwangi.