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COST OF LIVING

Poor rains likely to push inflation to 11 per cent

In Summary

• An 11 per cent inflation rate exceeds governments target set at a maximum of 7.5 per cent and minimum 2.5 per cent.

• In May 2017, inflation hit a 58-month high of 11.7 per cent attributed to a prolonged dry spell the preceding year.

James Yoko, maize farmer in Rangwe ,Homa Bay county
James Yoko, maize farmer in Rangwe ,Homa Bay county
Image: FILE

Kenya's inflation rate could hit  11 percent by December unless there is adequate rainfall, the Parliament Budget Office has raised concern

This means consumers should brace for tougher times ahead as the cost of basic food items increases.

An 11 per cent inflation rate exceeds governments target set at a maximum of 7.5 per cent and minimum of 2.5 per cent.

Two years ago, the cost of living measure hit a 58-month high of 11.7 per cent attributed to a prolonged dry spell the preceding year coupled with it being an election year.

This was largely highlighted by rising in prices of sugar, milk, maize grain, and other food items.

In May 2017, maize grain which is Kenya’s staple food, jumped the highest at 54.30 per cent year-on-year to Sh64.35, closely followed by the cost of sugar which rose 49.4 per cent to an average price of Sh168.18.

According to the PBO, although stable weather has been highlighted as a key driver of economic growth in 2019, the poor performance of the March-May long rains is likely to negatively impact the country’s food production and in turn, slowing down the economy.

“Given a much delayed onset of the long rains season, the amount of rainfall for most parts of the country is currently below 55 per cent of what is normally experienced,” the PBO said in a report dubbed Unpacking the Estimates of Revenue and Expenditure for 2019/20 and the medium term.

The report shows rains are likely to come to an end by end of May meaning most parts of the country will receive below average rainfall amounts by end of the long rain season.

The delayed onset adversely affected the planting season especially for those reliant on agriculture as a source of livelihood.

 

his means lower food production, inadequate fodder for livestock, and inadequate water and electricity supply should be expected with the below average rainfall.

This will, in turn, reduce agro-processing output and a possibly widen the current account deficit due to reduced agricultural exports.

“Furthermore, the Kenya Agriculture Livestock Research Organisation (KALRO) has recently expressed fears of a worsening invasion of armyworms due to the scarcity of rains which creates a thriving environment for the pests,” the report states.

Kenya, being an agricultural economy saw the sector grow 6.6 per cent according to the 2019 Economic Survey, accounting for nearly two-thirds of the country’s economic output.

Last month, the cost of living measure stood at 6.58 per cent on account of poor rains which resulted in a surge in food prices.

Sifted maize flour, kales, potatoes, loose maize grains, and flour and tomatoes recorded increases of 29.82, 25.30, 19.2726.1415.90 and 15.31 respectively.

Other factors that may negatively impact inflation are the slow pace of implementation of infrastructure projects and risks to the external outlook from unfavourable export commodity prices.