- The inflation rate in August was the highest since June 2017 when it hit 9.21 percent.
- The month-to month food and non-alcoholic beverages index increased by 0.5 per cent.
Image: JAMES WAINANA
Kenya’s inflation climbed to a five year high in August on soaring food and fuel prices as well as cost of home equipment and appliances.
Monthly inflation data released on Wednesday by the Kenya National Bureau of Statistics (KNBS) shows a measure of cost of living over the last 12 months rose by 20 basis points to 8.5 per cent up from 8.3 per cent in July.
It marks the third month in a row that year-on-year cost of living measure crossed the upper limit target of 7.5 percent, a trend last witnessed five years when the country went to the presidential polls.
The inflation rate in August was the highest since June 2017 when it hit 9.21 percent.
The statistics body said the inflation was largely driven by average cost of food and non-alcoholic drinks which climbed 15.3 per cent. Housing, Water, Electricity, Gas and Other Fuels Index increased by 5.6 per cent in the last 12 months.
''Furnishings, household equipment and routine household maintenance Index increased by 10.3 per cent in the last 12 months. Transport Index increased by 7.6 per cent,'' KNBS said.
The Consumer Price Index (CPI), a measure of the weighted aggregate change in retail prices paid by consumers for a given basket of goods and services increased by o.4 per cent to Sh125.58 from Sh125.05 in July.
The month-to month food and non-alcoholic beverages index increased by 0.5 per cent.
Prices of a kilo of maize flour loose, sugar, mangoes, rice and a bar of laundry soap rose by 4.7 , 4.6 , 4.1, 2.9 and 1.5 per cent receptively during the month under view.
A two-kilo packet of white maize flour, the country's staple food hit a high of Sh152 despite the government subsidy.
Maize flour recorded the highest price increase (year-on-year) of 37.9 per cent followed by kerosene at 30.5 per cent.
The country has been experiencing maize shortage for at least four months now, an aspect that prompted the National Treasury impose waiver of import duty and allowed imports outside the Common Market for Eastern and Southern Africa (Comesa).
Beer, wine and rent went up by 1.2, 0.8 and 0.7 per cent respectively. Even so, vegetable prices eased during the month, with carrot and onion prices dropping 6.4 and 2.4 per cent in that order.
Experts have predicted an even higher inflation coming months as the shilling continues to tumble against the dollar.
According to Rufas Kamau of FX Pesa, the Central Bank needs to work with speed to stabilise the weakening shilling or the country risk experiencing worst inflation.
''Apart from the weakening shilling, the planned scrapping off the fuel subsidy programme will pile more pressure to the cost of living, pushing households to wall,''Kamau said.
He is however, optimistic that the situation will soften as harvesting period in various parts of Western Kenya approaches.
The high inflation is however a global phenomena, with leading economies like the US, UK and several countries in the Western Europe reporting a 40-year high.
On Friday, the US Federal Bank is expected to raise the base lending rate by between 0.75 and 1.5 per cent to slow inflation.
Apex banks globally use the interest rates as either a gas pedal or a brake on the economy when needed.
They set the short-term borrowing rate for commercial banks, and the banks pass it along to consumers and businesses.
With inflation running high, they can raise interest rates and use that to pump the brakes on the economy in an effort to get inflation under control.
In May, CBK raised the base lending rate by 50 basis points to 7.5 per cent as a measure to contain the rising living cost.