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Inflation spikes on cost of unga

BUSINESS
By Edward Kamau Macharia | November 1st 2019

A worker at Kakamega's Khetia Supermarket arranges maize flour on June 13, 2018. KNBS report says the high price of unga have spiked the inflation rates. [Benjamin Sakwa, Standard]

A sustained high cost of food items has pushed up the cost of living for Kenyans.

The key factor that has led to the rise in consumer prices is the delayed onset of the long rains, disrupting the planting season for maize and other major crops.

The impact is now being seen in the cost of maize flour, which has gone up to Sh125 per 2kg packet, a 49 per cent rise from Sh83 in October last year.

The Kenya National Bureau of Statistics (KNBS) in the latest data released yesterday said inflation in October rose by 4.95 per cent compared to 3.83 per cent in September.

It attributed the rise to the increase in the cost of food items, especially maize. It is, however, still within Central Bank’s preferred range of between 2.5 per cent and 7.5 per cent.

“Prices of several foodstuffs were significantly higher during the month under the review compared to the prices recorded during the previous month,” said the statistics body in a statement.

The cost of a 2kg packet of maize flour went for Sh125.40 in October compared to Sh119.91 in September.

Compared to October last year, the cost of a similar quantity of flour has gone up 49.59 per cent, retailing at Sh82.83 a year ago.

Other food items whose prices went up in October include beans, green grams and tomatoes.

“The food and non-alcoholic drinks index increased 0.48 per cent… for instance, in October 2019, prices of maize grain - loose, maize flour - sifted and tomatoes increase by 5.82, 4.58 and 4.44 per cent respectively,” said KNBS.

“The year-on-year food and non-alcoholic drinks inflation increased 6.31 per cent in September to 8.74 per cent in October.”

The high cost in these products eroded declines in the cost of energy where, for instance, the per litre price of super petrol decline 4.17 per cent, with electricity, cooking gas and diesel also posting declines, albeit modestly.

The cost of some food items such as sugar, cabbages and kales (Sukuma wiki) also posted declines.

The cost of vegetables came down following the recent rains that spread across the country, with the biggest drops seen in the prices of cabbages (5.4 per cent) and spinach (4.6 per cent). The International Monetary Fund (IMF) has revised downwards the projection of Kenya’s economic growth this year to 5.6 per cent, reflecting a tough environment for most sectors.

In its World Economic Outlook in April, the Washington-based institution had forecast the country’s economic growth at 5.8 per cent compared to 6.3 per cent in 2018.

IMF joins other institutions, such as the World Bank and Treasury, which have all lowered the country’s economic outlook.

The 6.3 per cent growth last year was the highest in over five years as Kenya recovered from a period of electioneering and drought.

IMF expects the economy to grow faster in 2020 by six per cent, as the agricultural sector, the mainstay of the country’s economy, recovers from the effects of poor rains.

Already, in the first two quarters of the year, total national output dropped compared to last year as the agricultural sector performed poorly following bad weather.

In the first three months of 2019, the economy expanded by 5.6 per cent compared to 6.5 per cent in the corresponding quarter of 2018, with the service industries such as wholesale and retail trade, transportation, accommodation, and food services, financial and insurance activities compensating for a sluggish agricultural and manufacturing sector.

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