Kenya's rising cost of living leaves low-income earners struggling

KIPPRA Director Rose Ngugi. [Edward Kiplimo, Standard]

Low-income Kenyans have been hit hardest by high inflation, a new report says.

Low-income households experienced a challenging 2022 because of the increased cost of living, said Rose Ngugi, director of the Kenya Institute for Public Policy Research and Analysis, or KIPPRA.

"When food inflation is going up, then everybody is affected, and more so the low-income households, who spend about 60% of their income on food," Ngugi said. "So, anytime food prices go up, then the cost-of-living increases, and the low-income earners are hit or bear a heavy burden."

KIPPRA recently released the Kenya Economic Report 2023, which said officials tried this year to reduce 2022's inflation rate of 9.6% to a range of 2.5% to 7.5%, the targeted range of Kenya's Central Bank.

The report said 77% of workers earned less than the minimum wage, which covers approximately half of living costs.

Kenyan Treasury Cabinet Secretary Njuguna Ndung'u blamed companies' appetite for monopoly and dominance, which reduces market competition.

"The new administration is concerned with the problems that have led many Kenyans to sink into abject poverty," Ndung'u said. "One of the identified problems is the market capture, so that those at the bottom of the pyramid do not get returns for their sweat and investment."

After years of borrowing to finance infrastructure projects such as roads and railways, Kenya now struggles to repay the debt. The current government under President William Ruto emphasizes the importance of robust revenue collection to service the country's debt and economic development.

Samuel Nyandemo, an economics lecturer at the University of Nairobi, said the government needs to support citizens by reducing taxes on basic commodities.

"The president means well for this country," Nyandemo said. "He needs to come out of the box and put away this appetite of borrowing with a view of raising revenue, removing subsidies gradually and, more importantly, reducing certain taxes - particularly taxes relating to increasing the cost of living.

"We need to see the gradual removal of subsidies on maize flour, on oil products, cooking oil and, more importantly, on fuel," he said.

Kenya had record-high fuel prices in September, with gasoline reaching $1.42 per liter. That price heightened concerns among an already financially burdened population.

The government has asked its creditors, particularly China, for more time to restore economic stability after 10 years of borrowing.