2 January 2013

Kenya: Consumers Worse Off Despite Inflation Drop

INFLATION has dropped to its lowest in over 20 months to 3.2 per cent as per figures released last week by the Kenya National Bureau of Statistics, but are consumers better off than they were in 2011?

Prices of some of the commodities used to come up with the consumer price indices and eventually inflation have been rising or have risen since last December.

To calculate the inflation KNBS picks a few common items popular with consumers for everyday living and monitors their prices in a period of two weeks each month to calculate the average selling price of these items per month.

KNBS uses select retail outlets in 25 zones located in 13 urban centres in Nairobi. For instance, mobile phone tariffs were lower in December 2011 than they were in December 2012.

Airtel increased its call rate to other networks to about Sh4 per minute while previously it was a flat rate of Sh3 across all networks.

Text message tarrifs were also increased to Sh2 to other networks from Sh1. Orange also increased its prices to Sh4 per minute for cross-network calls.

Public transport fares have gone up by an average of Sh10 for various routes like between Westlands and town among others.

Tomatoes, which are also included in the food basket used by KNBS to measure inflation, now retail at an average of Sh20 for three large tomatoes while a similar amount could buy four tomatoes in December 2011.

Milk prices shot up in December 2012 to Sh40 from Sh35 same month the previous year. Bread increased from Sh37 to Sh45.

While KNBS said in its December 2012 inflation data that price of electricity reduced to Sh577 for every 50KWH from Sh736 for the same amount in the previous year, the reality on the ground is different.

For most domestic users, a Sh1000 package could only get you 64KWH meaning that at that rate, 50kwh of electricity was worth Sh781.25.

"Fare has gone up and medical expenses and as much as i try to make cuts here and there in the budget but i still find myself spending more now that i used to spend in 2011," said Pauline Akinyi who lives in Dandora.

KNBS said that in December last year, there was a combination of significant rises and drops in the average prices of several food items that were noted compared to their respective December 2011 prices.

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