Inflation dips slightly on mixed food prices

Heavy rains over the recent months were not enough to bring down the cost of living as the prices of products increased by similar margins in January compared to December.

Inflation dropped marginally to 5.78 per cent in January from 5.82 per cent in December, with government data showing a dip in cost of some products was offset by a spike in others.

Key to the marginal reduction was cost of transport, which went down by 0.04 per cent, while food prices posted a mixed bag with declines seen mostly among commodities that thrive during rainy seasons.

“Food and Non-Alcoholic Drinks’ Index increased by 0.39 per cent between December 2019 and January 2020 mainly driven by increase in prices of some food items outweighing decrease registered in others,” said the Kenya National Bureau of Statistics when releasing the inflation figures yesterday.

The data also shows the cost of housing, water and fuel went up, while electricity declined.

Oscillate

Analysts expect inflation to be between five and eight per cent this year.

“Headline inflation is projected to oscillate between five per cent and eight per cent this year, with food inflation expected to revert to the two-year average levels of four to nine per cent with long rains season (March – May) expected to normalise food supplies,” said Genghis Capital in a recent outlook.

“The subdued global demand is expected to have a positive knock on local fuel pump prices, curbing fuel inflation flare up.”

Factors that might see prices, especially of food go up include the locust invasion and the ongoing rains. The rains have had varied impact on agriculture, with some key food producing regions anticipating a decline in output.

“Farmers in cereal growing regions were unable to harvest their crops due to continuous rains and flooded fields,” said the Agriculture ministry in a recent report, adding that crops in some parts of the country had been destroyed by severe hailstorms.