Kenya’s overall inflation rose to 8.3% in July 2022 from 7.9% in June 2022, largely due to increases in food and fuel prices.
Inflation stats over the last 3 months stand as follows:
- May – 7.1%
- June – 7.9%
- July – 8.3%
Inflation was largely driven by average cost of food and non-alcoholic drinks which climbed 15.3% and ‘commodities under furnishings, household equipment, and routine household maintenance which recorded a 9.8% increase,’ according to reports.
The main contributors were carrots and grains. A prolonged drought in parts of the nation have also stoked prices. Despite a fuel subsidy keeping the cost unchanged in July 2022, consumers paid more for:
- Kerosene – 30.5%
- Diesel – 29.8%
- Petrol – 25.0%
This comes as the Monetary Policy Committee of the Central Bank of Kenya (KCB) maintained its May 2022 benchmark lending rate at 7.5% after an increase from 7% in April.
Fuel inflation was reported to have rose to 10.0% in June from 9.0% in May, driven by increases in fuel and cooking gas (LPG) prices on account of higher international oil prices even as the bank singled out government measures to bring down the cost of living in the East African nation.
According to the Central Bank of Kenya:
“…this increase was moderated by measures implemented by Government to stabilise fuel prices, lower electricity
tariffs, and subsidies on fertilizer prices.
Additionally, the recent waiver of import duties and levies on white maize, the subsidy on retail prices of sifted maize flour, and the recent reduction in VAT on LPG will further moderate domestic prices.
– Central Bank of Kenya (CBK)
Inflation has been increasing every month for the last 6 months in 2022, going further away from the bank’s target band of 2.5% to 7.5%.
CBK added that ‘global inflationary pressures remain elevated, despite the recent moderation in commodity prices. Financial markets volatility has increased amid the tightening of monetary policy in the advanced economies.’
However, in addition to the measures under place by the Kenya government, CBK says its action of tightening monetary policy in May 2022 was timely in anticipating emerging inflationary pressures and its impact was still transmitting through the economy.