Monday September 30 2019
Kenya Inflation Rate at Near 1-1/2-Year Low of 3.83%
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya declined to 3.83 percent in September 2019, its lowest since April last year, from 5.0 percent in the previous month. Prices slowed mostly for transport.

Year-on-year, prices slowed mainly for transport (1.91 percent vs 9.53 percent in August), driven by diesel (-4.65 percent vs -2.16 percent) and petrol (-3.38 percent vs -1.13 percent); food & non-alcoholic beverages (6.31 percent vs 7.13 percent), namely tomatoes (22.51 percent vs 23.72 percent) and carrots (10.17 percent vs 18.47 percent); and housing & utilities (0.99 percent vs 1.39 percent), of which electricity 200 KWh (7.87 percent vs 8.74 percent) and electricity 50 KWh (-21.61 percent vs -20.72 percent). Cost also increased at a softer pace for clothing & footwear (1.57 percent vs 1.79 percent); furnishings & household equipment (1.55 percent vs 1.82 percent); restaurants & hotels (2.13 percent vs 2.27 percent); miscellaneous goods & services (2.35 percent vs 2.52 percent); health (1.35 percent vs 1.58 percent); recreation & culture (0.38 percent vs 0.46 percent) and alcoholic beverages & tobacco (6.21 percent vs 6.73 percent).

In contrast, prices rose slightly faster for communication (4.46 percent vs 4.44 percent) and education (1.58 percent vs 1.52 percent).

On a monthly basis, consumer prices went down 0.11 percent, after decreasing 0.90 percent in the previous month. Prices decreased much less for food & non-alcoholic beverages (-0.40 percent vs -1.89 percent) and cost rebounded for housing & utilities (0.07 percent vs -0.10 percent) and transport (0.48 percent vs -0.03 percent).




Monday September 23 2019
Kenya Holds Policy Rate Steady at 9%
Central Bank of Kenya | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Kenya left its benchmark interest rate at 9% during its September meeting, as widely expected, saying that inflation remained well anchored within the target range and that the economy was operating close to its potential. The Committee also noted that the projected tightening of fiscal policy will probably provide scope for accommodative monetary policy in the near term. Still, policymakers stressed that there is need to remain vigilant on the possible effects of the increased uncertainties in the external environment, namely the escalation of trade tensions between the US and China, other geo-political tensions which have resulted in volatile international markets, and shifting expectations on the nature and timing of Brexit.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained within the target range in July and August 2019, and is well anchored. The inflation rate fell to 5.0 percent in August from 6.3 percent in July, reflecting decreases in the prices of both vegetable and non-vegetable food crops due to improved supply. Food inflation declined to 6.7 percent in August from 7.9 percent in July following improved weather conditions. Non-food-non-fuel (NFNF) inflation remained below 5 percent, indicative of muted demand pressures and spillover effects of the excise tax indexation in July and recent increase in fuel prices. Overall inflation is expected to remain within the target range in the near term mainly due to expectations of lower food prices with the expected favourable weather conditions, and lower electricity prices reflecting the reduced usage of expensive power sources. The recent increase in international oil prices is expected to exert moderate upward pressure on fuel prices, but with limited pass-through effects on inflation. 

Private sector credit grew by 6.3 percent in the 12 months to August, compared to 6.1 percent in July. Strong growth in credit to the private sector was observed in the following sectors: trade (8.4 percent); manufacturing (7.5 percent); consumer durables (23.0 percent); private households (8.6 percent); and finance and insurance (6.3 percent). The uptake of credit particularly by Micro, Small and Medium Enterprises (MSMEs) is expected to increase as innovative new credit products in the banking sector become fully deployed. Credit uptake will also be supported by ongoing reforms in the banking sector to strengthen the credit information sharing mechanism and promote transparency in pricing. The banking sector remains stable and resilient.

Leading indicators of economic activity such as growth in electricity and cement consumption, tourist arrivals, consumption-based taxes, and imports of intermediate goods, indicate that growth has remained strong in 2019. This is expected to continue for the rest of the year, supported by agricultural production, implementation of the Big 4 agenda, strong growth of MSMEs and the service sector, foreign direct investment and a stable macroeconomic environment. The MPC Private Sector Market Perception Survey conducted in September 2019 indicates that inflation expectations remain well anchored within the target range, mainly due to expectations of lower food prices following improved supply. Nevertheless, the optimism is tempered by concerns about the effect of trade tensions between the U.S. and China on global growth, slow growth in private sector credit and the remaining pending bills in both the public and private sectors.

The MPC noted that inflation expectations remained well anchored within the target range, and that the economy was operating close to its potential. The Committee also noted the prospective tightening of fiscal policy which would provide scope for accommodative monetary policy in the near term. Nevertheless, there is need to remain vigilant on the possible effects of the increased uncertainties in the external environment. The MPC concluded that the current policy stance remains appropriate, and therefore decided to retain the CBR at 9.00 percent. 

The MPC will continue to closely monitor developments in the global and domestic economy, including any perverse response to its previous decisions, and stands ready to take additional measures as necessary.





Monday September 02 2019
Kenya Inflation Rate Falls to 5-Month Low of 5%
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya decreased to 5.0 percent in August 2019 from 6.3 percent in the previous month. This is the softest inflation rate since March, mainly reflecting weaker food price growth.

Year-on-year, prices rose at a slower pace mainly for food & non-alcoholic beverages (7.1 percent vs 8.5 percent in July); housing & utilities (1.4 percent vs 4.1 percent) and transport (9.5 percent vs 10.5 percent), following a decline in the retail price of super petrol and diesel. Also, cost eased for clothing & footwear (1.8 percent vs 1.9 percent); furnishings & household equipment (1.8 percent vs 1.9 percent); restaurants & hotels (2.3 percent vs 2.8 percent); miscellaneous goods & services (2.5 percent vs 2.8 percent); communication (4.4 percent vs 4.5 percent); health (1.6 percent vs 1.8 percent); education (1.5 percent vs 1.6 percent) and alcoholic beverages & tobacco (6.7 percent vs 9.6 percent). Meantime, inflation remained steady for recreation & culture (0.5 percent).

On a monthly basis, consumer prices inched down 0.9 percent, following a 0.4 percent decrease in the preceding month. Main downward pressure came from food & non-alcoholic beverages (-1.9 percent vs -1.0 percent), mainly attributed to favourable weather conditions. The prices of significant food items including sukuma wiki (kales), potatoes, cabbages, carrots, tomatoes and maize grain loose decreased by 8.01, 7.81, 6.78, 6.01, 4.89 and 2.80 percent, respectively. Also, cost dropped for housing & utilities (-0.1 percent vs 0.1 percent), mainly as a result of the decrease in prices of some cooking fuels. Transport prices decreased by 0.03 percent mainly due to the reduction in pump prices of diesel and petrol by 3.14 and 2.45 percent, respectively. 



Wednesday July 31 2019
Kenya Inflation Rate Rises to 3-Month High of 6.27%
Kenya National Bureau of Statistics | Agna Gabriel | agna.gabriel@tradingeconomics.com

Kenya’s annual inflation rate increased to 6.27 percent in July of 2019 from 5.70 percent in the previous month, below market expectations of 6.6 percent. Still, it was the highest inflation since April.

Year-on-year, prices advanced faster for food & non-alcoholic beverages (8.47 percent vs 6.98 percent in June); housing & utilities (4.09 percent vs 4.07 percent); education (1.56 percent vs 1.50 percent); recreation & culture (0.54 percent vs 0.47 percent) and alcoholic beverages & tobacco (9.58 percent vs 8.91 percent). On the other hand, cost slowed for transport (10.52 percent vs 10.96 percent); clothing & footwear (1.94 percent vs 2.05 percent); furniture & household goods (1.93 percent vs 2.12 percent); miscellaneous goods & services (2.84 percent vs 2.95 percent); communication (4.45 percent vs 4.49 percent) and health (1.77 percent vs 3.75 percent). 

On a monthly basis, consumer prices decreased 0.36 percent in July, after a 0.69 percent slump in the prior month. Food & non-alcoholic beverages dropped 1.04 percent, while other main components increased: housing & utilities (0.14 percent); transport (0.22 percent); and clothing & footwear (0.07 percent).


Friday June 28 2019
Kenya Inflation Rate Rises Less than Expected
Kenya National Bureau of Statistics | Joana Ferreira | joana.ferreira@tradingeconomics.com

Kenya's inflation rate rose slightly to 5.70 percent year-on-year in June 2019 from 5.49 percent in the previous month, but missing market expectations of 6.40 percent.

Main upward pressure came from: food & non-alcoholic beverages (6.98 percent vs 6.33 percent in May); housing & utilities (4.07 percent vs 4.56 percent); transport (10.96 percent vs 11.08 percent); clothing & footwear (2.05 percent vs 2.12 percent); furnishings & household equipment (2.12 percent vs 2.46 percent); restaurants & hotels (2.68 percent vs 2.96 percent); and miscellaneous goods & services (2.95 percent vs 2.92 percent).

On a month-on-month basis, consumer prices dropped 0.69 percent, the largest decline since October last year, following a 0.07 decline in May. Food & non-alcoholic beverages slumped 1.60 percent, while other main components increased: housing & utilities (0.05 percent); transport (0.26 percent); and clothing & footwear (0.16 percent).


Tuesday June 04 2019
Kenya Inflation Rate Moderates to 5.49% in May
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya dropped to 5.49 percent in May 2019 from 6.58 percent in the previous month. Prices slowed mostly for food while they rose further for transport.

Year-on-year, inflation slowed primarily for food & non-alcoholic beverages (6.33 percent vs 8.17 percent in April), as weather conditions improved and likely boosted agricultural production. Also, prices rose at a slower pace for housing & utilities (4.56 percent vs 5.78 percent); clothing & footwear (2.12 percent vs 2.33 percent); furnishings (2.46 percent vs 2.50 percent); restaurants & hotels (2.96 percent vs 3.23 percent); miscellaneous goods & services (2.92 percent vs 3.07 percent).

In contrast, cost advanced faster for transport (11.08 percent vs 10.84 percent).

On a monthly basis, consumer prices decreased 0.07 percent, after a 3.51 percent rise in the previous month. It was the first drop in consumer prices since last November. Main downward pressure came from food & non-alcoholic beverages (-0.37 percent vs 6.86 percent), namely spinach, sukuma wiki (kale) and tomatoes which recorded decreases of 10.69, 9.35, and 6.78 percent, respectively. However, prices of some other foodstuffs like maize grain, sugar and maize flour sifted increased over the same period but still recording lower prices than May last year. 


Tuesday May 28 2019
Kenya Holds Key Interest Rate Unchanged at 9%
Central Bank of Kenya | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Kenya left its benchmark interest rate unchanged at 9% at its May 27th 2019 meeting, as widely expected. Policymakers said that the decision is appropriate and based on the backdrop of domestic stability, optimistic growth prospects, improving weather conditions in most parts of the country and increased uncertainties in the global financial markets. The Committee added that inflation expectations remained well anchored within the target and that the economy was operating close to its potential, but will keep an eye on possible spillovers of recent food and fuel price increases.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained within the target range in March and April 2019. The inflation rate stood at 6.6 percent in April compared to 4.4 percent in March, mainly reflecting increases in food prices attributed to depressed supply of vegetables and other fastgrowing food crops following the delayed onset of the long rains. Food inflation rose to 7.7 percent in April from 2.9 percent in March. However, non-food-non-fuel (NFNF) inflation remained below 5 percent, indicating that demand pressures and the spillovers of the rise in food and fuel prices were muted. Overall inflation is expected to remain within the target range in the near term largely due to expectations of lower food prices following improving weather conditions, and lower electricity prices with the reduced usage of expensive power sources. Additionally, a timely release of maize stocks from the Strategic Grain Reserve will support the stability of food prices.

Private sector credit grew by 4.9 percent in the 12 months to April, compared to 4.3 percent in March. Strong growth in credit to the private sector was observed in the following sectors: manufacturing (7.9 percent); trade (8.4 percent); finance and insurance (13.3 percent); and consumer durables (16.4 percent). Private sector credit growth is expected to continue to strengthen in the remainder of 2019. The banking sector remains stable and resilient.

The economy recovered strongly in 2018, with real GDP growth increasing to 6.3 percent from 4.9 percent in 2017. This reflected a strong recovery in agriculture, manufacturing, and a buoyant services sector, particularly trade, information and communication, accommodation and restaurants, transport and storage, and finance and insurance. Leading indicators of economic activity show that growth remained resilient in the first quarter of 2019, despite the delayed onset of the long rains. Growth in 2019 is expected to be supported by agricultural production, robust growth of MSMEs and the service sector, increased foreign direct investment and a stable macroeconomic environment. Additionally, the continued alignment of Government spending to the Big 4 priority sectors is expected to boost economic activity in manufacturing, agriculture, construction and real estate, and health sectors.

The MPC Private Sector Market Perception Survey conducted in May 2019 indicated that inflation expectations remained well anchored within the target range, with expectations of lower food prices following improved weather conditions, and the stability in the exchange rate.  

The Committee noted that inflation expectations remained well anchored within the target range, but there is need to remain vigilant on possible spillovers of recent food and fuel price increases. The Committee further noted that the economy was operating close to its potential. The MPC concluded that the current policy stance remains appropriate, and will continue to monitor any perverse response to its previous decisions. The Committee therefore decided to retain the CBR at 9.00 percent. 

The MPC will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.


Tuesday April 30 2019
Kenya Inflation Rate Speeds Up to 6.58% in April
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya peaked to 6.58 percent in April 2019 from 4.4 percent in the previous month. It is the highest inflation rate since September 2017, mainly pushed up by prices of food.

Year-on-year, prices increased faster for food & non-alcoholic beverages (8.17 percent vs 2.84 percent in March) mainly impacted by prolonged drought conditions. Also, inflation quickened for transport (10.84 percent vs 10.08 percent), amid a rebound in prices of diesel (4.30 percent vs -1.37 percent). Additional upward pressure came from cost of restaurants & hotels (3.23 percent vs 3.04 percent); communication (4.56 percent vs 4.52 percent); health (4.55 percent vs 4.51 percent); education (1.45 percent vs 1.24 percent); recreation & culture (0.69 percent vs 0.58 percent) and alcoholic beverages & tobacco (8.83 percent vs 7.71 percent).

On the other hand, cost slowed for housing & utilities (5.78 percent vs 8.19 percent), namely electricity 50 kWh (4.4 percent vs 6.44 percent) and electricity 200 kWh (4.5 percent vs 5.95 percent). Also, prices rose less for clothing & footwear (2.33 percent vs 2.37 percent); furnishings (2.50 percent vs 2.95 percent) and miscellaneous goods & services (3.07 percent vs 3.15 percent). 

On a monthly basis, consumer prices inched up 3.51 percent, after a 1.60 percent increase in the previous month. It is the highest monthly inflation rate since at least February 2010, mainly due to prices of food & non-alcoholic beverages (6.86 percent vs 3.30 percent), of which sifted maize flour (29.82 percent), Kales (sukuma wiki) (25.30 percent), potatoes (19.27 percent), loose maize grain (26.14 percent), flour (15.90 percent) and tomatoes (15.31 percent).


Friday March 29 2019
Kenya Inflation Rate Rises to 4.35% YoY in March
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Kenya rose to 4.35 percent in March 2019 from 4.14 percent in the previous month and above market expectations of 4.2 percent. Prices went up further mainly due to food & non-alcoholic beverages and transport.

Year-on-year, prices advanced at a faster pace for food & non-alcoholic beverages (2.84 percent from 1.09 percent in January); transport (10.08 percent from 9.56 percent); health (4.51 percent from 4.47 percent); and alcoholic beverages (7.71 percent from 7.33 percent). On the other hand, cost slowed for housing & utilities (8.19 percent from 12.35 percent); clothing & footwear (2.37 percent from 2.43 percent); furnishings & household equipment (2.95 percent from 3.03 percent); miscellaneous goods & services (3.15 percent from 3.16 percent); and recreation & culture (0.58 percent from 0.83 percent). Additionally, inflation was steady for restaurants & hotels (at 3.04 percent, the same as in February); communication (4.52 percent); and education (1.24 percent).

On a monthly basis, consumer prices increased 1.6 percent, after a 0.82 percent gain in February. It was the highest monthly inflation rate since April 2017, as main upward pressure came from cost of food & non-alcoholic beverages (3.30 percent from 1.70 percent), mostly due to the prevailing draught conditions causing the costs of some foodstuffs; and transport (0.42 percent from -0.50 percent), due to a rise in pump prices of petrol and diesel. Meanwhile, cost of housing & utilities fell 0.06 percent, after rising 0.12 percent in February, mainly due to lower cost of electricity which outweighed increase in house rents and cooking fuels. 


Wednesday March 27 2019
Kenya Leaves Key Interest Rate Steady at 9%
Central Bank of Kenya | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Kenya held its benchmark interest rate unchanged at 9 percent at its March 27th 2019 meeting reflecting domestic macroeconomic stability, sustained optimism on the economic growth prospects despite the delayed onset of the long rains in parts of the country, a gradual rise in international oil prices and the weakening of global growth. The MPC noted that inflation expectations remained well anchored within the target range, and that the economy was operating close to its potential.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained within the target range in January and February 2019, largely due to stable food prices, lower electricity and fuel prices, and muted demand driven inflationary pressures. Overall inflation declined to 4.1 percent in February from 4.7 percent in January. Non-food-non-fuel (NFNF) inflation remained below 5 percent, indicating that demand pressures in the economy were muted. The rise of international oil prices may exert moderate upward pressure on prices of fuel. However, overall inflation is expected to remain within the target range in the near term, in part due to adequacy of food supplies and lower electricity prices with the reduced usage of expensive power sources.         

The foreign exchange market has remained stable supported by the narrowing of the current account deficit to 4.7 percent of GDP in the 12 months to February from 5.5 percent in February 2018. This reflects robust performance of exports particularly horticulture, resilient diaspora remittances, and higher receipts from tourism and transport services. Additionally, growth in imports slowed mainly due to lower imports of food and machinery. The current account deficit is expected to narrow to 4.8 percent of GDP in 2019 from an estimated 4.9 percent in 2018.

The CBK foreign exchange reserves, which currently stand at USD8,251 million (5.3 months of import cover), continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market. 

The MPC Private Sector Market Perception Survey conducted in March 2019 indicated that inflation expectations remained well anchored within the target range, with respondents revising their expectations for the near term further downwards on account of expected stability in food prices and lower electricity prices. The Survey also showed sustained optimism that economic growth would be stronger in 2019 due to, among other factors, expectations of favourable weather conditions, implementation of the Big 4 projects by the Government, public infrastructure investments, and a stable macroeconomic environment. However, the optimism was tempered by delayed onset of the long rains in most parts of the country, and slow growth in private sector credit particularly to MSMEs.

Global growth is showing signs of weakening in 2019, weighed down by trade tensions between the U.S. and China, the slower growth of the Chinese economy, uncertainties over the nature and timing of Brexit, and the pace of normalization of monetary policy in the advanced economies. These developments have resulted in increased volatility in the global financial markets.

The Committee noted the High Court ruling on March 14, 2019, relating to interest rate caps under Section 33B of the Banking Act. Nevertheless, the Committee stressed that interest rate caps severely constrain the formulation, conduct and effectiveness of monetary policy. Further, these interest rate caps have hampered access to credit by growth sectors, particularly MSMEs.

The Committee noted that inflation expectations remained well anchored within the target range, and that the economy was operating close to its potential. The MPC concluded that the current policy stance remains appropriate, and will continue to monitor any perverse response to its previous decisions. The Committee therefore decided to retain the CBR at 9.00 percent. The MPC will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.