SURGING

Cost of living aggravates as June inflation hits 7.9%

This is partly attributed to Ukraine - Russia crisis which has stoked energy and food prices after hurting the global supply chain.

In Summary
  • The cost of maize flour, Kenya's staple, has increased by at least 12 per cent since last month. 
  • A litre of cooking oil was up 4.7 per cent to Sh387.89 compared to  Sh370.71 in May
Image: STAR

A rise in food prices and transport pushed up the cost of living in June to a two-year high of 7.9, above the government's ceiling by 40 basis points.

Latest Kenya National Bureau of Statistics (KNBS) data shows the Consumer Price Index, a measure of 12 top items in the food basket rose to an index of 124.22 compared to 123.12 the previous month. 

The cost of living has been rising on a monthly basis since February, hitting 7.1 per cent in May. 

This is partly attributed to Ukraine - Russia crisis which has stoked energy and food prices after choking the global supply chain. 

“The rise in Kenya’s inflation was mainly due to increase in prices of commodities under; food and non-alcoholic beverages (13.8 per cent); furnishings, household equipment and routine household maintenance (9.2 per cent); transport (7.1 percent) and housing, water, electricity, gas and other fuels (6.8 per cent),” KNBS said. 

The average prices of key foodstuff shot up compared to May, with a two kilo  packet of maize flour rising by over 50 per cent in the past year to trade at an average of Sh213 compared to Sh129.56 last year.

The cost of maize flour, Kenya's staple, has increased by at least 12 per cent since last month. 

The global wheat shortage has also seen the price of a 2-kg packet of wheat flour shoot to Sh186.90 from Sh129.80 last year and Sh165.89 last month. 

A litre of cooking oil was up 4.7 per cent to Sh387.89 compared to  Sh370.71 in May while a 500ml packet of milk sold at Sh58.39 up from Sh57.30, up 1.9 per cent.

During the same period, prices of kale (sukuma wiki), spinach, and cabbages dropped by 5.0, 4.1, and 4.0 per cent, respectively.

Upward review of petrol and diesel prices also saw the transport index rise by 0.9 per cent during the period.

A litre of super petrol is now retailing at a record Sh159.12 in Nairobi, and over Sh160 in remote areas. It could be retiling at Sh184.68 were it not for the government subsidy plan. 

A litre of diesel, used to power heavy-duty vehicles and machines, is now going for Sh140 in the capital city. Without the fuel subsidy, the pump price of diesel would have been Sh188.19.

A unit of kerosene is selling at Sh127.94, up from Sh118.94 in the period between May 15 and June 14, 2022. Kerosene is popular among the poor who use it for cooking and lighting.

KNBS also noted that the housing, Water, Electricity, Gas and Other Fuels Index, increased by six per cent between May and June.  

This is, however, not coming as a surprise as the government had projected an inflation rate above 7.5 per cent in the coming months to August.

Addressing a post-Monetary Policy Committee media briefing in May, CBK governor Patrick Njoroge said the inflation rate is expected to rise above the government's ceiling of 7.5 per cent in the coming months on the uncertain global supply of basic commodities. 

This saw the apex bank hike the base lending rate by 50 basis points to 7.5 per cent to pump brakes on the economy in an effort to get inflation under control.

"The high inflation witnessed is supply induced. The accommodative policy is aimed to contain the secondary effects of this,'' Njoroge said. 

The rising cost of living is not just unique to Kenya. Several developed countries including the US, UK and Germany are experiencing 40-year high inflation.

This has seen President Joe Biden's regime raise the federal rate twice in a year.

A fortnight ago, the federal bank launched its biggest broadside yet against inflation, raising benchmark interest rates by 0.75 per cent in a move that equates to the most aggressive hike since 1994.