Written By Lisa Murimi
Kenya’s inflation rate has dropped to its lowest level in four years, easing to 4.3% in July from 4.6% in June, according to data from the Kenya National Bureau of Statistics (KNBS).
This significant decrease is largely attributed to the strong performance of the Kenyan shilling, which has reduced transport costs and stabilized overall prices.
Consumer prices experienced a month-on-month decrease of 0.2% in July, reversing June’s 0.4% increase.
This decline contrasts with the median inflation forecast of 4.7% projected by economists surveyed by Bloomberg.
The easing inflation could influence the Central Bank of Kenya’s upcoming decision on interest rates, with a potential cut expected when the Monetary Policy Committee meets on August 6.
Key contributors to the lower inflation rate include a 21% appreciation of the shilling and a notable reduction in transport costs, which saw a rise of just 4% in July compared to 7.7% in June. Gasoline prices also fell by 0.53%, alleviating transportation expenses.
Food prices remained stable, with a 5.6% annual increase in July, supported by surplus maize.
However, prices for vegetables like cabbages, onions, and tomatoes surged, while maize and wheat flour prices fell. Non-food sectors saw price hikes, including a 15.5% rise in cooking gas and a 1.5% increase in house rents.
The Kenyan government has set an inflation target range of 2.5% to 7.5% for the medium term.
The central bank’s interest rate decision will be closely watched for its potential impact on the economy and shilling stability.
