The cost of living continued to worsen after prices of goods and services increased by 7.1 per cent in May, the highest level in two years.
The increase in prices of goods and services known as the inflation rate is the highest since February 2020.
Last month, a lot of Kenyans were forced to dig deeper into their pockets to pay for basic commodities, especially foodstuff, according to data from the Kenya National Bureau of Statistics (KNBS).
The KNBS data on the cost of living index — known as the consumer price index (CPI) – showed that a kilogram of edible cooking oil rose by 47 per cent year-on-year, retailing at an average of Sh370.71 in major towns around the country compared to Sh252 in the same month last year.
Similarly, the retail price of a 500 grams of cooking fat also rose by 44.6 per cent to retail at an average of Sh175.9 compared to Sh121.7 in May last year.
The increase in prices of cooking oil is due to the disruption in the supply of palm oil, the main ingredient used to manufacture cooking oil, from countries such as Indonesia and Malaysia.
Some of these countries, such as Indonesia, have been forced to prohibit the export of palm oil to first cater for the domestic demand.
Palm oil is also used to manufacture detergents and cosmetics, which explains why you have been paying more for bar soap and laundry soap.
For 800 grams of bar or laundry soap, consumers paid an average of Sh153.7 in May, an increase of slightly over a fifth compared to Sh122 in May last year. Five hundred grams of detergents retailed at an average of Sh192.9 compared to Sh165.5.
There was no respite for motorists despite the fuel subsidy. A litre of kerosene, diesel and petrol rose by 21.3 per cent, 21.5 per cent and 18.7 per cent respectively in the period under review.
Wheat products have also been on the rise owing to Russia-Ukraine war, two of the largest exporters of the cereal.
A two-kilogramme of wheat flour rose by almost a third to Sh166 in the review month compared to Sh129 in May last year.
A 400-gramme white bread retailed at an average of Sh58.15 compared to Sh53.86 in May last year. A two-kilogramme of maize flour retailed at an average of Sh147.57, an increase of 23.8 per cent compared to last year.
This is even as the Central Bank of Kenya (CBK); whose main function is to stabilise the prices in the economy sought to slam the break on the fast pace at which prices increased by raising its benchmark lending rate for the first time in seven years.
By raising its benchmark lending rate known as the Central Bank Rate (CBR) or the rate at which CBK lends to banks who then lend to businesses and households, the financial regulator was signaling higher interest rates charged by banks which would then reduce the supply of money into the economy.
With CBK expected to keep the inflation rate at between 2.5 per cent and 7.5 per cent, it is afraid that the country would soon be dealing with a situation where there is too much money chasing too few goods.
“Monetary Policy Committee (MPC) saw there is a clear and present danger of breaching the 7.5 per cent band in the next few months thus decided to increase the CBR, our signal rate,” said CBK Governor Dr Patrick Njoroge in a post-MPC press briefing yesterday. The economy is not yet out of the words with official data showing that prices of goods and services increased at a faster rate than wages for workers last year.
Thus, cash-starved consumers have been paying more for food items as the conflict in eastern Europe, drought, climate change and the lingering effects of the Covid-19 pandemic made shopping an unbearable experience for a lot of families.
Last year, the economy grew by 7.2 per cent as it recovered from the after-shocks of the Covid-19 pandemic. However, the International Monetary Fund (IMF) expects it to slow down to 5.7 per cent this year.
Kenya is mostly importing the high cost of living in advanced countries with the war in Ukraine exposing the weaknesses of globalisation, said Dr Patrick Njoroge.
“In Kenya, we are an open economy…we are not an island,” said Dr Njoroge, noting that the policy choices for policymakers are narrow.
The IMF has urged governments to put in place food and fuel subsidies.