How elections raised poor households’ budget

A trader at a market in Embu town. Food prices shot up during the election period. [Photo: File, Standard]

Low-income earners suffered the most during the panic buying of foodstuff during the August polls, Central Bank of Kenya (CBK) has said.

According to CBK Governor Patrick Njoroge, food sellers increased prices a few days before and after the election as consumers rushed to stock up due to fears over the outcome.

“There were supply constraints as trucks kept off the road, leading to shortage of food items,” he said.

Speaking in Nairobi a day after retaining the benchmark lending rate at 10 per cent, Dr Njoroge said the prices of most food items shot up further between August 11 and 25.

This pushed up inflation from 7.47 per cent to 8.04 per cent.

“After elections, there was a frenzy with people rushing to buy food in large quantities. Shortage led to substantial price increases at that time,” he said.

After the polls, most people avoided major towns, with suppliers also unwilling to risk their trucks on roads. In Nairobi, the central business district was deserted as most people remained indoors.

Spending power

Dr Njoroge said the low-income group bore the brunt since they usually purchase in small quantities every day to match their budget constraints.

“They do not have fridges but buy in small quantities and, therefore, if what they are seeking is not available or the price is high, they are forced to alter the spending power,” said the governor.

According to data from Kenya National Bureau of Statistics, food inflation shot to 13.57 per cent in August from 12.19 per cent in July. This reversed the trend that had seen it drop from a high of 21.52 per cent in May as short rains set in.

Overall inflation is now above the CBK target range of between 2.5 per cent and 7.5 per cent for the seventh month in a row since February.

However, Dr Njoroge said with normalisation of food supply, the advent of short rains and the Government’s maize subsidy, food inflation would ease, leading to a drop in overall inflation.