Kenya’s overall inflation rate edged upwards to 3.3% in January 2025, from 3.0% in December 2024, according to the Kenya National Bureau of Statistics (KNBS).
This uptick was primarily driven by rising food prices.
Food inflation accelerated to 6.1% in January, compared to 4.8% in December, primarily due to significant price increases in vegetables such as tomatoes (up 17.9%) and onions (up 6.8%).
Transportation costs also contributed to the inflationary pressure, increasing by 0.7%.
While the housing, water, electricity, gas, and other fuel categories saw a slight decline in prices due to lower electricity and gas costs, kerosene prices rose by 2%.
Core Inflation Declines
Core inflation, which excludes volatile items like food and energy, moderated to 2.0% from 2.2% in December 2024.
Conversely, non-core inflation, which includes food and energy, increased to 7.1% from 5.2%.
Policy Implications
The release of core inflation data by KNBS is significant, as it provides policymakers with a more reliable measure of inflation for guiding monetary policy decisions.
“It (core inflation) is a more reliable measure of inflation commonly used by central banks to inform monetary policy decisions and communication with the public,” the KNBS stated.
This data is crucial as policymakers aim to maintain price stability while supporting economic growth.
Monetary Policy Outlook
With inflation remaining below the midpoint of the central bank’s target range and expectations of continued moderation, market observers anticipate another interest rate cut at the upcoming Monetary Policy Committee meeting on February 5th.
In December, the Central Bank of Kenya lowered the benchmark interest rate by a significant 75 basis points to 11.25%.
