THE rate of inflation rose to 6.02 per cent from 4.91 per cent in July on account of rising food and alcohol prices.

Prices of commodities such as milk, cabbages, sukuma wiki and beef went up during the month compared to June as did the prices of popular East African Breweries products including brands such as Tusker and Pilsner.

But prices of potatoes, sifted maize flour, sugar, tomatoes as well as electricity dropped in the month when compared to the previous month.

Kenyans were also paying much higher prices for transport due to increases in petrol and diesel prices in the month. Pump prices are likely to go up even further this month because of the depreciating value of the shilling against the dollar and the factoring in of the 1.5 new import levy in the calculation of prices by the Energy Regulatory Commission.

This may put further pressure on inflation not forgetting that commodities may also go up as manufacturers factor in the new levy on end products made using imported raw materials.

A fresh round of hike in prices of goods is expected if the VAT Bill is finally passed into law.

Standard Chartered Bank head of research for Africa Razia Khan said the Central Bank monetary committee may retain its policy rate at 8.5 per cent for the remainder of the year.

Banks have started reducing their lending rates on the back of the lowered CBR rate but another round of interest rate cuts is unforeseen from the commercial institutions.

The cost of borrowing may also rise further after a 10 per cent exercise tax on fees charged by financial institutions introduced in the new budget is effected anywhere from this month.

The price comparisons were drawn from data collected from selected retail outlets in the second and third weeks of the month under review.

In neighbouring Uganda inflation rate in the year to July rose to 5.1 percent from a revised figure of 3.6 per cent a month earlier, official data showed yesterday.

The Uganda Bureau of Statistics said the core inflation rate climbed to 6.4 per cent from a revised 5.8 per cent in June.