Kenya’s inflation surged to a new record of 7.1 percent in May as the cost of fuel, food and beverages continue to rise sharply.
Tuesday, the Kenya National Bureau of Statistics (KNBS) data showed that the overall year-on-year Inflation rate for May 2022 was 7.1 percent compared to 6.47 percent recorded in April 2022.
“The rise in Kenya’s inflation was mainly due to an increase in prices of commodities under; food and non-alcoholic beverages (12.4 percent); furnishings, household equipment and routine household maintenance (7.9 percent); transport (6.4 percent) and housing, water, electricity, gas and other fuels (6.0 percent),” KNBS in their report.
The average prices of key foodstuffs shot up compared to April, with a 2kg packet of sifted maize flour rising 6.9 percent to sell at Sh147.57 in May, a litre of cooking oil was up 5.3 percent to Sh370.71, while a 500ml packet of milk sold at Sh57.30, up 3.7 percent.
During the same period, prices of kale (sukuma wiki), spinach, and cabbages dropped by 5.0, 4.1, and 4.0 percent, respectively. The upward review of petrol and diesel prices also saw the transport index rise by 0.8 percent during the period.
Consequently, the Central Bank of Kenya on Monday raised its key interest rate by 50 basis points to 7.5 percent in a bid to contain rising inflation and stabilize the country’s currency, the Shilling. The interest rate increase is the first such move in close to seven years.
“The Committee noted the elevated risks to the inflation outlook due to increased global commodity prices and supply chain disruptions, and concluded that there was scope for a tightening of the monetary policy in order to further anchor inflation expectations. In view of these developments, the MPC decided to raise the Central Bank Rate (CBR) from 7.00 percent to 7.50 percent,” the CBK said in a statement.
“To be sure, inflation expectations are to remain elevated and we expect inflation to surpass and remain above the 7.5% upper limit of the target band from June, through Q3-2022. Inflation pressures should however begin to soften in the final quarter of 2022,”NCBA Research Team said in an emailed Monetary Policy Committee (MPC) Reaction note.
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