29 December 2012

Kenya: Relief As Inflation Rate Hits Lowest Level Ever

Photo: The East African
Nairobi shoppers (file photo): Consumers still suffering despite inflation going down.

Annual inflation slowed to 3.20 per cent in December, down from 3.25 per cent last month, to equal the historical lowest level recorded in October 2010.

This slowing inflation during the first two weeks of December was mainly attributed to lower food prices. Kenya's inflation was at its all time high of 31.5 per cent in May of 2008 as a result of political upheavals arising from a disputed presidential election.

Data from the Kenya bureau of statistics show that inflation has dropped consistently in the last 13 months from 18.3 per cent in December last year, as the cost of the food basket maintains a downward trend on average.

By June 2012, the inflation rates had slowed to 10.05 on a gradual slide towards single digits driven by a more predictable agricultural output due to good rains.

During the month of December 2012, the cost of food and non alcoholic beverages rose 0.77 per cent compared to last month.

" A combination of significant rises and drops in the average prices of several food items were noted compared to their respective December 2011 prices" The KNBS stated.

Housing, water, gas and other fuels went up 0.06 percent compared to November. This was attributed to higher cost of house rent, kerosene and other cooking fuels which erased the gains on lower cost of electricity and cooking gas.

Despite lower costs of petrol and diesel, transport index went up by 1.55 per cent in December compared to November due to inflated Christmas holiday season bus and Matatu fares.

The cost of travelling from urban to areas and holiday spots shot up by more than 500 per cent on some routes, while generally long distance travel recorded inflated fares without regard for demand and supply rules.

Costs of all food items recorded significant drop compared to a similar period last year, with the price of 1kg of sugar taking the lead with 24.8 per cent drop at 122.07 compared to 162.29 in December last year.

Maize and wheat flour shed 3.6 and 5.7 per cent respectively compared to the corresponding period in 2011. Electricity costs per 50 kilowatt hours dropped by 21.6 percent this year to Sh584.50 compared to Sh736.00 last year, while the cost of petrol went down by 10.3 percent this year compared to 2011, and cooking gas prices dropped 20.5 per cent in 2012.

A 13kg cooking gas tank which was costing Sh3275.84 is now averaged at Sh2605.55. Diesel, which accounts for the highest common transport user volumes ends the year with a modest drop of 2.4 per cent at Sh106.83 in December 2012 compared to Sh109.48 corresponding month last year.

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