High food prices push January inflation to 6.9%

Consumers continue to grapple with increased food prices as inflation increased to 6.9 per cent in January.

This, after declining for two consecutive months in November and December, and easing below the statutory level to 7.3 per cent in July.

November recorded 6.8, which then decreased to 6.6 per cent in December.

According to Kenya National Bureau of Statistics (KNBS) latest data, the price changes in food, energy and transport, which cover about 57 per cent of household budgets, majorly drove the January inflation levels.

“Food and Non-Alcoholic Beverages Index rose by 0.4 per cent between December 2023 and January 2024. The rise in food inflation is mainly attributed to the increase in prices of some food items, which outweighed the decrease in prices of other foodstuffs,” KNBS said in a statement.

Prices of cabbages, carrots, oranges and Irish potatoes increased by 10.0, 7.4, 3.1 and 1.7 per cent, respectively between December 2023 and January 2024.

However, prices of mangoes, tomatoes and sugar dropped by 3.8, 3.6 and 2.2 per cent, respectively.

Housing, water, electricity, gas and other fuels' Index increased by 1.6 per cent between December 2023 and January 2024 mainly due to increase in prices of 200 kWh and 50 kWh of electricity by 11.4 per cent and 13.7 per cent, respectively.

This was mainly on the back of the increase in price of foreign exchange rate fluctuation adjustment per kWh by 103.1 per cent.

“The price of a litre of kerosene however dropped by 2.4 per cent during the same period,” KNBS adds in part.

On the other hand, Transport Index dropped by 0.9 per cent during the period, mainly due to decrease in prices of petrol and diesel by 2.3 per cent and 2.5 per cent, respectively.

Year-on-year, the Index increased by 10.6 per cent in the last 12 months to January 2024.

Notably, the year-on-year inflation for education services, which follows a normal seasonal trend, was 2.8 per cent.

“There was an increase of 1.8 per cent in the indices for education services between December 2023 and January 2024, occasioned by an rise in tuition fees,” the statistics body says.

Continued weakening of the shilling against the US dollar is also expected to spike the cost of goods, as Kenya remains a net importer.

The shilling is expected to remain weak with projections of further drops in the medium-term, amid persistent forex demand from importers, as well as the impact of high global inflation.

The Central Bank of Kenya on Wednesday quoted the shilling at 160.75 against the dollar, meaning it has shed about 29 per cent of its value year-to-date.

A volatile shilling means importers will be spending more in bringing in goods as raw materials for factories, thereby raising the cost of inputs for firms, and the burden passed down to consumers.

In this case, an importer will now spend an extra Sh29 to buy a dollar for imports compared to the same period last year.

Since early 2020 when it started depreciating, the shilling has lost a value of about 60 per cent.