Kenya: More Pain As Wholesale Prices of Goods Increase

19 September 2021

Food, clothes, water, electricity, steel manufacturers and suppliers have increased the wholesale prices of the commodities by 6.02 per cent in the past one year, new data from the Kenya National Bureau of Statistics (KNBS) shows.

This compounds the already rapidly increasing retail cost of goods, with taxes, levies and transport pushing up prices.

The KNBS Producer Price Index (PPI) indicates that in the second quarter of the year to June , the manufacturer's price of food products such as bread, milk and juice cost 6.44 per cent more than they did last year.

The PPI, which has been released annually since 2012, measures the wholesale prices of commodities directly from the manufacturers before they enter the supply chain, which gives a good measure of how the producers have been adjusting their prices.

At 7.4 per cent, cloth makers raised the wholesale prices of their commodities the most, with the PPI rising to 104.17 from 96.99 per cent, food products index rose 6.44 per cent to 110.13 from 103.47, textiles increased 5.44 per cent from 102.01 to 107.56, while plastics, critical for packaging of most goods, rose 6.18 per cent to 104.17 from 98.1.

Construction industry

Meanwhile, metals, key in the building and construction industry, increased 16.68 per cent to hit 111.55 from 95.6, electricity rose 4.75 per cent from 98.86 to 103.56, while water increased 0.22 per cent to 101.52 from 101.3.

Kenya last year rebased measurement of the PPI to reflect changed production patterns and a new industrial structure, while the Consumer Price Index (CPI), which measures the changes in prices of commodities at the shop after they exit the supply chain, was also rebased by creation of a new basket of 330 items from the previous 234 items.

"The overall producer prices in June 2021 increased by 1.56 per cent compared to March. Over the same period, manufacturers of apparels registered the highest price rise of 10.25 per cent while prices for manufacture of motor vehicles had the highest price decline of 1.67 per cent. Over the last one year, the highest price increase was in the manufacture of basic metals at 16.68 per cent," the statistics body said.

"The second quarter year-on-year producer inflation was 6.02 per cent in June compared to negative 0.79 per cent in June 2020. The index rose from 101.58 in June 2020 to 107.70 in June 2021," KNBS said.

Overall, manufacturers across all sectors of the economy increased prices of their products by 5.8 per cent, electricity, gas, steam and air conditioning suppliers raised their charges by 4.8 per cent, while water suppliers, sewerage and waste management service providers charged 0.2 per cent more during the period.

The increased wholesale cost of products has resulted in a spill-over effect to other sectors of the economy.

The resulting effect on consumers has been felt as they absorb this higher costs.

At the same time, the cost of seeking medical services increased 3.28 per cent, transport hiked 7.93 per cent, information and communication rose 2.35 per cent, and clothing 2.72 per cent.

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