29 March 2018

Kenya: Inflation Falls Against Power, Food Prices

The cost of living measure last month defied sharp price increases in electricity, food and charcoal to drop to a 58-month low.

Inflation fell to 4.18 per cent in March from 4.46 per cent a month earlier.

The decline came despite cost increases in key food items and cooking fuel such as charcoal and gas.

"Between February and March 2018, food and non-alcoholic drinks' index increased by 1.54 per cent. This was mainly due to increases in prices of some foodstuffs which outweighed decreases recorded in respect to others," the Kenya National Bureau of Statistics (KNBS) said in a statement.

But despite the increases, the KNBS said year on year food inflation eased to 2.19 per cent in March from 3.83 per cent, explaining the overall drop in headline inflation since food price is crucial to measuring the rate.

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, making it the main driver of the cost of living.

Some food items that recorded price surges include Kale, Irish potatoes and tomatoes.

The KNBS data indicates that charcoal prices shot up the highest by 27 per cent to Sh107 per four-kilo tin. This came in the wake of a three-month logging ban imposed by the government following reports of mass deforestation that threatens the country's forest cover and water sources.

Refilling a 13-kg cylinder of cooking gas rose to an average of Sh2,169 from Sh2,150 a month earlier.

Electricity prices also followed the upward trend, with homes consuming 200-kilowatt hours (kWh) per month paying a high of Sh4.262 in March, a seven per cent jump.Users of 50 units of electricity monthly paid five per cent higher in March at Sh730.

At 4.18 per cent, the March inflation is within the Central Bank of Kenya (CBK) preferred range of between 2.5 per cent and 7.5 per cent.

The rate has stayed within the four-year low range since last November, despite sharp prices increments in key household commodities.

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