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.




Thursday February 28 2019
Kenya Inflation Rate at 6-Month Low of 4.1% in February
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya fell to 4.14 percent in February 2019 from 4.7 percent in the prior month. It is the lowest inflation rate since August, amid a generalized slowdown in prices, in particular for food and transport.

Year-on-year, inflation softened for food & non-alcoholic beverages (1.09 percent vs 1.62 percent in January) mainly due to cheaper loose maize grain (-40.99 percent vs -40.58 percent), sifted maize flour (-30.68 percent vs -29.04 percent) and sugar (-8.51 percent vs -7.69 percent); transport (9.56 percent vs 11.05 percent), amid falling cost of diesel (-1.11 percent vs 7.63 percent) and petrol (-7.03 percent vs -2.03 percent); and housing & utilities (12.35 percent vs 12.68 percent), namely house rent (4.04 percent vs 4.59 percent). Also, prices increased at a slower pace for clothing & footwear (2.43 percent vs 2.80 percent); furnishings (3.03 percent vs 3.58 percent); restaurants & hotels (3.04 percent vs 3.36 percent); miscellaneous goods & services (3.16 percent vs 3.52 percent); communication (4.52 percent vs 4.69 percent); health (4.47 percent vs 4.52 percent); education (1.24 percent vs 1.48 percent) and recreation & culture (0.83 percent vs 0.90 percent).

In contrast, cost advanced faster for alcoholic beverages (7.33 percent vs 6.48 percent).

On a monthly basis, consumer prices inched up 0.82 percent, after rising 0.35 percent in the previous month. Main upward pressure came from cost of food & non-alcoholic beverages (1.70 percent vs 0.78 percent), such as maize grain (1.11 percent vs 0.53 percent) or beans (1.09 percent vs 0.89 percent). Meanwhile, prices slowed for housing & utilities (0.12 percent vs 0.20 percent), namely house rent (0.18 percent vs 0.46 percent) and declined for transport (-0.50 percent vs -1.40 percent), mainly as a result of significant decreases in pump prices of diesel (-7.77 percent vs -7.86 percent) and petrol (-1.91 percent vs -8.67 percent).


Thursday January 31 2019
Kenya Inflation Rate Hits 5-Month Low of 4.7%
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya fell to 4.70 percent in January 2019 from 5.71 percent in the prior month and below market expectations of 5 percent. It is the lowest inflation rate since August, as prices slowed primarily for food, housing & utilities and transport.

Year-on-year, prices slowed mostly for food & non-alcoholic beverages (1.62 percent vs 2.54 percent in December); housing & utilities (12.68 percent vs 13.47 percent) and transport (11.05 percent 14.34 percent). In addition, cost rose less for: clothing & footwear (2.80 percent vs 3.41 percent); furnishings (3.58 percent vs 3.95 percent); restaurants & hotels (3.36 percent vs 3.60 percent); miscellaneous goods & services (3.52 percent vs 3.90 percent); education (1.48 percent vs 4.93 percent); recreation & culture (0.90 percent vs 1.04 percent); alcoholic beverages & tobacco (6.48 percent vs 6.82 percent); education (1.48 percent vs 4.93 percent); recreation & culture (0.90 percent vs 1.04 percent) and alcoholic beverages & tobacco (6.48 percent vs 6.82 percent).

On the other hand, inflation accelerated slightly for communications (4.69 percent vs 4.66 percent) and health (4.52 percent vs 4.51 percent). 

On a monthly basis, consumer prices rose 0.35 percent, following a 0.65 percent gain in the previous month. Price pressure weakened as cost fell for transport (-1.40 percent vs 1.34 percent), mainly due to decreases in pump prices of petrol (-8.67 percent) and diesel (-7.86 percent). Also, prices went up at a slower pace for food & non-alcoholic beverages (0.78 percent vs 1.05 percent), namely maize grain (0.53 percent); sifted maize flour (0.75 percent); sugar (-2.56 percent) and beans (0.89 percent). Conversely, monthly inflation ticked up for housing & utilities (0.20 percent vs 0.07 percent), as a result of higher cost of house rents and cooking fuels. Partly contributing to this, were prices of domestic electricity consumption for 50 Kwh as well as for 200 KWh which increased by 1.68 and 1.15 per cent, respectively, attributed to increase in foreign and inflation adjustment charges.


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

The Central Bank of Kenya left its benchmark interest rate unchanged at 9.0 percent at its January 28th 2019 meeting, as widely expected. Policymakers said that the decision is appropriate and based on the backdrop of domestic macroeconomic stability, economic growth prospects, lower international oil prices, and increased uncertainties and weaker global growth outlook. The Committee noted that inflation expectations remained well anchored within the target range and that the economy was operating close to its potential. The bank also said that they will continue to monitor global and domestic economic developments and if necessary will take additional measures.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained stable within the target range in November and December 2018, largely due to lower food prices following favourable weather conditions, reduction in electricity tariffs, decline in fuel prices, and limited demand-driven inflationary pressures. Overall inflation was 5.7 percent in December compared to 5.6 percent in November. Non-food-non-fuel (NFNF) inflation remained below 5 percent, indicating that demand pressures in the economy were muted. Overall inflation is expected to decline in the near term, largely due to lower international oil prices, expectations of lower electricity prices following increased power generation from cheaper sources, and expected stability in food prices.

The economy picked up strongly in 2018, with data for the third quarter showing that real GDP growth accelerated to 6.0 percent in the first three quarters of 2018 from 4.7 percent in a similar period in 2017. An assessment of available indicators of economic activity showed that the strong growth continued into the fourth quarter of 2018. This improved performance reflected higher agricultural production, the continued recovery of the manufacturing sector, and the buoyant services sector, particularly trade, information and communication, accommodation and restaurants, transport and storage, and real estate. Micro, Small and Medium-Scale Enterprises (MSMEs) remained resilient in 2018 and are expected to support growth in 2019, to the extent that their constraints, including access to finance, are alleviated. Growth is expected to remain strong in 2019, supported by agricultural production, a stable macroeconomic environment, and continued improvement in the business environment. Additionally, the 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 January 2019 indicated that inflation expectations were well anchored within the target range, with respondents revising their inflation expectations for the near term downwards on account of expected lower prices of food, fuel and electricity. The Survey also revealed increased optimism that economic growth would be stronger in 2019 due to, among other factors, a better investment climate, continued infrastructure development, and implementation of the Big 4 projects by the Government. Expectations of increased agricultural production, the continuing decline in international oil prices, a stable macroeconomic environment and strong tourism performance also contributed to the strong positive sentiment. Nevertheless, the optimism was tempered by the slow growth in private sector credit, and concerns of a likely slowdown in global growth in 2019. 

Global growth is expected to weaken in 2019, with increased uncertainties with regard to the trade tensions between the U.S. and China, Brexit negotiations, slowdown of the Chinese economy, the partial shutdown of the U.S. government, and the pace of normalization of monetary policy in the advanced economies. These developments could lead to higher volatility in the global financial markets.

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.


Wednesday January 02 2019
Kenya Inflation Rate Highest in Over a Year at 5.71%
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Kenya rose to 5.71 percent in December 2018 from 5.6 percent in the prior month. It is the highest inflation rate since October 2017, as prices continued to advance for food and non-alcoholic beverages. Meantime, inflation remained elevated for housing & utilities and transport.

Year-on-year, prices rose faster for food & non-alcoholic beverages (2.54 percent vs 1.72 percent in November), especially carrots (14.86 percent); capsicums (22.74 percent) and Irish potatoes (38.17 percent). Also, inflation remained high overall for housing & utilities (13.47 percent vs 13.69 percent), namely charcoal (70.16 percent) and kerosene (46.58 percent); and transport (14.34 percent vs 15.57 percent), due to diesel (21.04 percent).

Meanwhile, cost slowed for clothing & footwear (3.41 percent vs 4.15 percent); furniture & household equipment (3.95 percent vs 4.37 percent); restaurants & hotels (3.60 percent vs 4.20 percent); miscellaneous goods & services (3.90 percent vs 4.18 percent); health (4.51 percent vs 4.81 percent); recreation & culture (1.04 percent vs 1.51 percent); education (4.93 percent vs 4.94 percent) and alcoholic beverages & tobacco (6.82 percent vs 7.20 percent).

On a monthly basis, consumer prices went up 0.65 percent in December 2018, following a 0.18 percent decrease in the previous month. Main upward pressure came from prices of: food & non-alcoholic beverages (1.05 percent vs -0.15 percent), such as tomatoes (13.17 percent) and carrots (8.86 percent); and transport (1.34 percent vs 0.81 percent), mainly on account of increase in local (7.44 percent) and international flight (0.63 percent) charges as well as bus (5.27 percent) and matatu fares (1.31 percent). Also, cost rebounded for housing & utilities (0.07 percent vs -1.24 percent), due to prices of charcoal (0.13 percent) and house rents (0.11 percent).


Friday November 30 2018
Kenya Annual Inflation Rate Edges Up to 5.58% in November
Kenya National Bureau of Statistics | Agna Gabriel | agna.gabriel@tradingeconomics.com

The annual inflation rate in Kenya went up to 5.58 percent in November of 2018 from 5.53 in the previous month, mainly due to higher prices of food and non-alcoholic beverages and transport. On a monthly basis, consumer prices went down 0.18 percent, following a 0.79 percent drop in October.

Year-on-year, prices advanced faster for food and non-alcoholic beverages (1.72 percent from 0.52 percent in October); transport (15.57 percent from 15.3 percent); communication (4.74 percent from 4.3 percent); education (4.94 percent from 4.8 percent) and alcoholic beverages and tobacco (7.2 percent from 7.05 percent). 

On the other hand, cost slowed for housing and utilities (13.69 percent from 17.12 percent); clothing and footwear (4.15 percent from 4.73 percent); furniture and household equipment (4.37 percent from 4.68 percent); restaurant and hotels (4.2 percent from 4.32 percent); miscellaneous goods and services (4.18 percent from 4.44 percent); health (4.81 percent from 5.92 percent) and recreation and culture (1.51 percent from 1.67 percent).

On a monthly basis, consumer prices decreased 0.18 percent, following a 0.79 percent fall in October. Prices of food and non-alcoholic beverages went down 0.15 percent, compared to a 1.76 percent decline in the prior month, mainly due to lower prices of maize and maize products. Additionally, cost of transport rebounded (0.81 percent from -0.86 percent), due to cost of petrol (0.91 percent from -0.9 percent). 


Tuesday November 27 2018
Kenya Interest Rate Steady at 9%
Central Bank of Kenya | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Central Bank of Kenya left its benchmark interest rate unchanged at 9.0 percent at its November 27th 2018 meeting, as widely expected. Policymakers said that the decision is appropriate and based on the backdrop of macroeconomic stability, economic growth prospects and uncertainties in the global financial markets. Policymakers noted that inflation expectations remained well anchored within the target range and that the economy was operating close to its potential. The Committee also said that they continue to monitor global and domestic economic developments and if necessary take additional measures.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained within the target range in September and October, largely due to lower food prices and muted demand-driven inflationary pressures. The inflation rate fell to 5.5 percent in October from 5.7 percent in September, following decreases in food prices which offset the increase in energy prices and transport costs following the implementation of VAT on petroleum products in September 2018. Non-food-non-fuel (NFNF) inflation remained below 5 percent, indicating that there were no demand pressures in the economy. Looking forward, overall inflation is expected to remain within the target range in the near term, mainly due to expected lower food prices reflecting favorable weather conditions, the decline in international oil prices, and the recent downward revision in electricity tariffs. The recent excise tax adjustment on voice calls and internet services is expected to have a marginal impact on inflation.

Data for the second quarter of 2018 showed a strong pickup of the economy, with real GDP growth averaging 6.0 percent in the first half of 2018 compared to 4.7 percent in the first half of 2017. This outcome was due to a strong recovery in agricultural activity due to improved weather conditions, continued recovery of the manufacturing sector, and resilient performance of the services sector particularly trade, tourism, information and communication, transport, and real estate. Overall growth in 2018 is expected to be strong, supported by recovery in agricultural production, alignment of Government spending to the Big 4 priority sectors, a stable macroeconomic environment, an improved business environment, and a favorable external environment.

The MPC Private Sector Market Perception Survey conducted in November indicated that inflation expectations were well anchored within the target range in the near term on account of lower food prices and reduction in electricity prices. The Survey revealed increased optimism for stronger overall growth in 2018. Respondents attributed this optimism to, among other factors, improved agricultural production, continued infrastructure development, an improvement in the business environment, focus by the Government on the Big 4 priority sectors, a stable macroeconomic environment and the expected increase in trade and tourist arrivals following the commencement of direct flights to the United States. However, the optimism was tempered by sluggish private sector credit growth, concerns over delayed government spending, and the recent increase in fuel prices.

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.


Wednesday October 31 2018
Kenya Annual Inflation Rate Slows to 5.53% in October
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Kenya fell to 5.53 percent in October of 2018 from 5.7 percent in September. Prices eased mainly due to slowdown in cost housing and utilities and transport, amid a petroleum products tax cut to 8 percent from an initial 16 percent at the beginning of September. On a monthly basis, consumer prices dropped 0.79 percent after rising 1.02 percent in the previous month.

Year-on-year, prices slowed for housing & utilities (17.12 percent compared to 17.44 percent in September); transport (15.30 percent compared to 17.29 percent); ); furnishings and household equipment (4.68 percent compared to 4.86 percent); restaurants & hotels (4.32 percent compared to 5.04 percent) and education (4.80 percent compared to 5.04 percent). 

Meanwhile, cost rose further for clothing & footwear (4.73 percent compared to 4.58 percent); miscellanous goods & services (4.44 percent compared to 4.30 percent); communication (4.30 percent compared to 0.61 percent); health (5.92 percent compared to 5.90 percent);  recreation & culture (1.67 percent compared to 1.61 percent) and alcoholic beverages & tobacco (7.05 percent compared to 6.48 percent). Also, inflation was steady for food and non-alcoholic beverages (at 0.5 percent, the same as in September).

On a monthly basis, consumer prices declined by 0.79 percent, after increasing 1.02 percent in the prior month. Cost of food & non-alcoholic beverages dropped (-1.76 percent compared to 0.37 percent) mostly due to lower prices of maize and maize products. Additionally, prices of transport decreased (-0.86 percent compared to 7.99 percent), due to cost of petrol (-0.9 percent compared to 2.6 percent) and diesel (1.5 percent compared to 5.1 percent). Also, prices of housing & utilities eased (0.20 percent compared to 0.47 percent).