Less than a year ago, Rosa Mumanyi, a Nairobi resident says she would spend a Sh1,000 on a week's shopping.
She was buying a 400gms loaf of bread at Sh50, a packet of milk at Sh50 and 2kg of sugar at Sh210. This has gone up to Sh60, Sh55-Sh60 and Sh270, respectively.
A two kilo packet of maize flour which was retailing at an average Sh90 in July last year had gone up to Sh126.31 in January this year.
The year-on-year food inflation now stands at 8.89 per cent, according to latest Kenya National Bureau of Statistics (KNBS) data.
Instead of the normal shopping in a retail store, Mumanyi now prefers doing her shopping in smaller quantities. For instance she buys cooking oil from oil ATMs in the estate.
Judith Oduor, another city resident says she has had to strictly focus on basics, doing away with luxurious products and impulse buying.
"Tough times call for tough measures," she explains.
Dinah* prefers getting her groceries from farms around the city or buy from the Nairobi County wholesale market Wakulima.
This is the plight of millions off Kenyans who are struggling to make ends meet, amid a rising cost of living.
Kenyans turned to social media over the weekend to protest high food prices, trending #LowerFoodPrices for three days straight.
They are faulting the government for failing to address high food prices that is pushing poor households to starvation, with major concerns being around basic food commodities such as sifted maize flour, bread, vegetables and fruits.
@Lizwathuti wrote on twitter: "Millions of people are already food insecure due to failed rains, low agricultural production, climate forced droughts, high food prices. With skyrocketing food prices in Kenya, I support the call to now #lowerfoodprices. Its about time. Food is a basic human need and right."
High taxation, production cost and wholesale prices are however being blame for the rising cost of goods in the country.
Prices of agricultural inputs such as seeds, fertilizers, feeds and chemicals also add up to the list of reasons that is pushing up the cost of food.
Fertiliser prices for instance have been on the rise in the past one year. A 50kg bag of DAP fertiliser has shot from Sh2,500 to about Sh5,000, affecting prices of farm produces.
Economic experts have warned the cost of living is likely to rise further on the high circulation of campaign money in the market, which is outpacing goods and services in supply.
Retailers have noted more households are being pushed to the “kadogo economy” due to reduced purchasing power, worsened by the high unemployment and job losses brought about by the pandemic.
Millers on Friday said demand for branded maize flour in the country is low.
According to the United Grain Millers Association chairman Kennedy Nyaga, the demand has been affected by low purchasing power by many Kenyans who are yet to recover financially from the impact of Covid-19.
The kadogo economy concept gained prominence in the late 1990s when retailers and manufacturers opted to break goods into small packages, retailing for as little as Sh2-Sh5, in order to maintain the lower end of the market. This was highly attributed to poverty.
The retail market saw an increase in wholesale prices in quarter three last year, which has seen shelf prices rise into this year, with super markets recording reduced sales according to the Retail Trade Association of Kenya (RETRAK).
“Increased prices has driven more consumers to the informal retail where bulk is broken into quantities lower than 500gm of basic FMCG (Fast-Moving Consumer Goods) found in formal retail,” RETRAK chief executive Wambui Mbarire said.
She notes consumption is more towards food, household daily requirements and less on luxury items.
In a telephone interview with the Star, Mbarire further noted uncertainties that come with the election period, and spikes in inflation, which have traditionally resulted in higher prices that hurt the consumer.
“ We urge politicians to campaign with tolerance so that the pressure of the economy does not react negatively to heightened political atmosphere,” she said, even as she called on manufacturers to innovate more so that there is an import substitution of items that can we sourced locally.
Manufacturers have however blamed the countries ever changing policies that come with increases in taxes.
“In these economic times, it is becoming extremely difficult for Kenyans to make ends meet," said Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga
She attributed this to the impact of Covid-19, numerous regulations and the ever-increasing cost of commodities due to high taxes, levies and fees that have continued to erode consumers purchasing power.
Some of the regulations include The Crop (Nuts and Oil Crops) Regulations 2020 which introduced new fees and levies as a measure to control thirteen (13) scheduled crops which include sunflower, sesame, coconut, cashew nut, groundnut/peanut, safflower, linseed jojoba, oil seed, flax seed and bambara nuts, among others.
Supply chain disruptions caused by Covid also led to an increase in the prices of crude palm oil and other intermediate products used in the manufacture of edible oils and its byproduct, bar soaps.
“With the implementation of these regulations, the price of essential commodities has increased further. An unfortunate outcome of this is that locally manufactured goods shall be beyond the reach of many citizens,” she said.
The Finance Act 2021 also introduced excise tax on raw materials and 16 per cent VAT on the supply of some products, effectively increasing the cost of manufacturing and final consumer prices.
Kenya Revenue Authority (KRA) has also implemented the 4.97 per cent inflation adjustment on specific rates of duty.
According to industry players, the inflation adjustment has aggravated an already dire situation, since the hospitality, aviation and tourism sectors, which are the main consumers of excisable goods, is still struggling to recover from the effects of the pandemic.
Additionally, the pandemic led to loss of livelihoods, as such, consumers’ purchasing power has dwindled.
The Finance Act 2021 also introduced 10 per cent excise tax on articles of plastic, affecting packaging costs , which are passed to consumers.
About 80 per cent of the products consumed in Kenya have been affected by the introduction of excise duty.
This impacts on industries in the food and beverage sector, dairy, soft, drinks, distribution businesses, retailers and consequently consumers.
Economist and Financial Risk Analyst Mihr Thakar notes with the elections, there is reduced investment which leads to a slowdown in jobs.
The Consumer Federation of Kenya (Cofek) has warned the cost of living is expected to even soar further in six months, as most investors are expected to either cut or reduce their investments.
Cofek Secretary General Stephen Mutoro termed the cost of living “too high and unsustainable.”
“The adjusted excise duty has impacted heavily on the various excisable goods," said Mutoro.
He said the cost of an average family meal will cost more on the tax, as well as opportunistic costs brought about by greedy and unscrupulous traders who take advantage to charge several times the increment thus making it a revenue stream.
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