Inflation drops to 10 per cent

THE high of living is easing with figures showing that prices of essential food commodities are falling. The country's rate of inflation for the month of June 2012 fell to 10.05 per cent from 12.22 in May as prices of commodities such as milk potatoes, cabbages, onions, oranges and sukuma wiki fell in the month. Increased production of milk has seen the price of the commodity fall from a high of Sh50 per half a litre packet in May to retail at Sh35 this month. Prices of agricultural commodities have also fallen as production has improved over the recent short rains.

As a result, the food and non-alcoholic drinks index dropped by 1.91 per cent between May and June this year. The housing, water, electricity, gas and other fuels index has also dropped in the month. This index fell by 0.20 per cent between May and June 2012 mainly on account of reduced costs of electricity, kerosine and cooking gas. "The average cost of consuming 50 units of electricity for instance declined from Sh625 in May to Sh600 in June 2012," the Kenya Bureau of Statistics noted in a statement.This decrease was as a result of reduced fuel cost adjustment charges per KWhr in June compared to May 2012, the bureau said.

The month also saw the cost of transport falling with the transport index dropping by 0.35 per cent due to lower prices of petrol and diesel. The slowing inflation rate may come as a big relief for Kenyans since the Central Bank is likely to review its key lending rates which could translate into lower interest rates on loans.