Cost of living expected to ease further as food prices decline

Anastacia Kemunto a trader displays her cereals at Kisii Municipal Market. [Sammy Omingo, Standard]

The cost of living is expected to further ease this month on the back of fallen food prices, according to a survey by the Central Bank of Kenya (CBK).

The slowdown in prices will affect grains, flour and cereals, according to the CBK Agriculture Survey.

Food prices play a major role in the country's inflation rate which has been almost hitting double digits in recent months.

Inflation rate, or simply the increase in prices of goods and services, fell for the third month in a row to nine per cent in January from 9.1 per cent in December, according to data by the Kenya National Bureau of Statistics (KNBS).

The slowdown in prices has been linked to the planned importation of duty-free grains and the recent short rains that eased the prices of milk and vegetables.

Additionally, the Russia-Ukraine conflict and the Covid-19 pandemic, according to the survey, no longer play a significant role in prices.

The survey, which sought views from 130 respondents in the retail and wholesale sector and farmers, noted that a majority of them expect retail prices of cereals to either decline or remain unchanged.

"The expected moderation of maize and wheat prices is on account of ongoing harvests in Kenya and Tanzania and the expected duty-free importation of maize and rice from February 2023," reads the survey in part.

"The ongoing harvest of rice in Mwea which started in December 2022 and is expected to end in February 2023 will continue moderating the price in the near term."

CBK sought to find out the changes in prices of essential agriculture commodities between November 2022 and January 2023.

Transport, input costs and weather patterns, the survey noted, continue to impact the commodity prices both at the retail and wholesale levels.

However, the recent short rains were favourable for the vegetable season.

"The prices of spinach, potatoes, sugar, peas, cabbages, and milk declined due to increased production following the short rains," the survey reads.

The short rains will also ease the price of animal products due to the availability of pasture for livestock.

"The price of cooking oil is expected to continue stabilising after several months of decline in line with falling international palm oil prices," the survey reads.

While transport, input costs and weather conditions affected both wholesale and retail markets, the survey says, the impact was not uniform when November 2022 is compared to January 2023.

"The impact of weather conditions was more dominant in January 2023 compared to input costs. This could be rationalised by the coming to an end of the short rains season and the easing of supply chain constraints which have supported the reduction in input prices," the survey says.

The survey also found that traders no longer considered Covid-19 or the Russia-Ukraine conflict to be a significant factor in prices.

Of the farmers surveyed, most cited high input costs (24 per cent) and weather patterns (15 per cent) as the main factors affecting agricultural production.

"The Russia-Ukraine war, Covid-19 and technology captured under others, had the least impact," the survey reads.

"Technology played a less significant role probably on account of low adoption of technology or mechanisation in farming.