Philip Wahome
28 August 2008
Nairobi — The rising cost of goods and services is expected to ease in the coming months to settle between 10 and 20 per cent.
This is despite the expected increase in the cost of water, electricity and a looming famine in northern Kenya.
Speaking during Stanbic Investment East Africa quarterly review, the fund manager's head of investment, analysis and research for East Africa, Kenneth Kaniu, predicted that inflation was on a downward trend.
"We are likely to see inflation settle below the 20-digit mark," said Mr Kaniu.
Currently, the measure of change in price of goods and services is at 26.5 per cent having fallen from high of 31.5 per cent in May 2008, its highest since the 90's.
The high level of inflation arose as a result of post-election violence which caused a slowdown in economic growth to 1.3 per cent in the first quarter of 2008.
However, the economic indicators have shown signs of resilience in the second quarter with sectors like construction, with cement manufacturing going up 23 per cent and corporate expenditure showing signs of increasing consumption.
"If companies invest on capital expenditure like buildings, that is an indication of growth and also shows underlying confidence in the economy by investors," said Stanbic lnvestments executive director David Kinyua.
However, compared to data from other African countries that almost share Kenya's economic and policies environment, it is still debatable why the country's inflation is so high.
For example, in Tanzania and Uganda, which neighbour Kenya, inflation rates were at single digit levels with Tanzania at 8.5 per cent while Uganda broke to double digit in June with 11.5 per cent.
Asked if Kenya should switch its mode of computing its inflation rate Mr Kaniu noted: "This is still a grey area that needs to be solved urgently."
Be the first to Write a Comment!
Copyright © 2008 The Nation. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
