Thursday November 23 2017
Kenya Leaves Monetary Policy Unchanged
Central Bank of Kenya | Stefanie Moya | stefanie.moya@tradingeconomics.com

The central bank of Kenya kept its benchmark interest rate unchanged at 10 percent for the seventh consecutive meeting on November 23rd 2017, as widely expected. Policymakers said the decision aims to continue to anchor inflation expectations in the context of favourable weather conditions, sustained macroeconomic stability, the conclusion of a prolonged election period, and an improvement in the global economy outlook.

Month-on-month overall inflation fell to 5.7 percent in October 2017 from 7.1 percent in September 2017, thereby remaining within the Government target range. This decline was largely due to lower food prices, particularly for cabbages and Irish potatoes. The decrease in food prices offset the increases in fuel and electricity prices in October. Non-food-non-fuel (NFNF) inflation remained below 5 percent, demonstrating that demand pressures are muted. Despite an increase in international oil prices which has exerted upward pressure on fuel prices, improved weather conditions and the extension of the maize subsidy are expected to continue supporting a further lowering in food prices and a decline in overall inflation in the near term.

The Committee noted that despite the effects of the drought experienced in the first half of 2017, and the prolonged elections in the second half of the year, economic growth has remained resilient. Growth has principally been supported by the services sector particularly the Micro, Small and Medium Enterprises (MSMEs). The economy is expected to grow by 5.1 percent in 2017, and to pick up strongly in the medium term supported by a stable macroeconomic environment.

The MPC Private Sector Market Perception Survey conducted in November 2017 showed that inflation was well anchored and is expected to decline in the short term. Respondents expected the exchange rate to remain stable supported by strong diaspora remittances and sufficient CBK foreign exchange reserves. The Survey also showed optimism in the economic prospects, with the conclusion of the elections, improved weather conditions, and continued public investment in infrastructure.

The Committee concluded that inflationary pressures in the economy were muted, and inflation was expected to continue to decline in the short term. The MPC therefore decided to retain the Central Bank Rate (CBR) at 10.0 percent. The MPC continues to monitor the impact of the interest rate caps on the effective transmission of monetary policy. The CBK will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.




Tuesday October 31 2017
Kenya Inflation Rate Slows to 5.72% in October
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in Kenya increased 5.72 percent year-on-year in October of 2017, easing from a 7.06 percent rise in the previous month and below market expectations of 6.73 percent. It is the lowest inflation rate since May of 2016 amid a slowdown in food cost, mainly due to better weather conditions. On the other hand, higher electricity cost and a rise in pump prices of petrol and diesel pushed transport cost up.

Compared to October of 2016, prices rose less for food and non-alcoholic beverages (8.47 percent compared to 11.50 percent in September); clothing and footwear (2.92 percent compared to 3.47 percent) and miscellaneous goods and services (3.29 percent compared to 3.34 percent). On the other hand, cost increased more for housing and utilities (3.58 percent compared to 3.27 percent); furnishings and household equipment (3.19 percent compared to 2.95 percent); transport (3.78 percent compared to 3.29 percent); restaurant and hotels (5.96 percent compared to 5.16 percent); communication (0.40 percent compared to 0.36 percent) and education (3.14 percent compared to 3.04 percent). 

On a monthly basis, consumer prices decreased 0.63 percent, following a 0.57 percent fall in the previous month. Cost declined faster for food and non-alcoholic beverages (-1.78 percent compared to -1.28 percent in September), namely carrots, cabbages, oranges, onions and wheat. In contrast, cost of housing and utilities rebounded (0.47 percent compared to -0.16 percent), due to electricity (4.06 percent compared to -7.07 percent) and cost rose faster for transport (0.86 percent compared to 0.70 percent), as a result of an increase in prices of diesel (2.22 percent compared to 1.15 percent) and petrol (3.63 percent compared to 2.29 percent).




Friday September 29 2017
Kenya Inflation Rate Slows to 7.06% in September
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in Kenya increased 7.06 percent year-on-year in September of 2017, following an 8.04 percent rise in the previous month. It is the lowest inflation rate since January amid a slowdown in food and electricity cost. On the other hand, higher pump prices of petrol and diesel pushed transport cost up.

Compared to September of 2016, prices rose less for food and non-alcoholic beverages (11.5 percent compared to 13.6 percent in August); housing and utilities (3.3 percent compared to 3.5 percent); clothing and footwear (3.5 percent compared to 3.8 percent) and furnishings and household equipment (2.95 percent compared to 3.2 percent). On the other hand, cost increased more for transport (3.3 percent compared to 2.3 percent in August); communication (0.4 percent compared to 0.3 percent) and education (3 percent compared to 2.8 percent). 

On a monthly basis, consumer prices fell 0.6 percent following a 0.6 percent rise in the previous month. Cost declined for food and non-alcoholic beverages (-1.3 percent compared to 1 percent in August), namely carrots, cabbages, potatoes, wheat, sugar and kale. Also, cost of housing and utilities decreased 0.2 percent compared to a 0.5 percent rise in August, due to electricity (-7.1 percent compared to 8.3 percent). On the other hand, cost of transport rose faster (0.7 percent compared to 0.03 percent), as a result of an increase in prices of diesel (1.2 percent compared to 1.6 percent) and petrol (2.3 percent compared to -1 percent).


Monday September 18 2017
Kenya Maintains Key Rate at 10%
Central Bank of Kenya |Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The central bank of Kenya kept its benchmark interest rate unchanged at 10 percent for the thirteenth consecutive meeting on September 18th, 2017, as widely expected. Policymakers said the decision aims to continue to anchor inflation expectations in the context of general macroeconomic stability, a prolonged election period and continuous uncertainties in the global economy.

Excerpts from the MPC Press Release:

The Monetary Policy Committee (MPC) met on September 18, 2017, to review the outcome of its policy decisions and recent economic developments. The meeting was held against a backdrop of general macroeconomic stability, a prolonged election period, and continued uncertainties in the global economy.

Month-on-month overall inflation rose to 8.0 percent in August 2017 from 7.5 percent in July 2017 reflecting limited supply of some food items, particularly tomatoes, following transport difficulties in the immediate period after the general elections. Additionally, unusual demand for some food items such as wheat flour and rice in the period before the elections resulted in a temporary shortage. Nevertheless, the contribution to overall inflation of some items such as maize grain, maize flour, milk,sugar, and Irish potatoes decreased in part due to favorable weather conditions and the positive impact of Government measures. Non-food-non-fuel (NFNF) inflation remained stable below 5 percent suggesting that demand pressures in the economy were muted. A normalization of supply, the expected short rains, and supportive measures taken by the Government are expected to further lower food prices in the near term.

The Committee reviewed the recent economic developments and noted that growth expectations remain unchanged. The stable macroeconomic environment is expected to be supported by a recovery in agriculture due to normal weather conditions, a resilient services sector, continued infrastructure development, and stability in the global economy. Spending by the National and County Governments in the near term is expected to provide an additional stimulus.

The MPC Private Sector Market Perception Survey conducted in September 2017 showed that inflation was expected to decline due to lower food prices with the expected short rains and the Government subsidies on some food items. Growth expectations by banks and non-banks remained unchanged in the September 2017 survey relative to the July 2017 survey, with banks expecting a lower growth on account of weaker private sector credit growth and concerns over the continuing election process. However, nonbank private firms expect the continued public investment in infrastructure, and favourable weather conditions during the short rains season to support growth in 2017.

Although the outlook for global growth has improved, uncertainties remain particularly with regard to U.S. economic policies, the post-Brexit resolution, and the pace of normalization of monetary policies in advanced economies.

The Committee concluded that the current policy stance remains appropriate. The MPC therefore decided to retain the Central Bank Rate (CBR) at 10.0 percent in order to continue to anchor inflation expectations. The CBK will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.


Thursday August 31 2017
Kenya Inflation Rate Accelerates to 8.04% in August
Kenya National Bureau of Statistics |Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Kenya increased 8.04 percent year-on-year in August of 2017, above 7.47 percent in July and market expectations of 7.6 percent. The rise in annual inflation is mainly attributed to higher prices of food, as a consequence of reduced supply especially in the second week of the month. The country is struggling with hunger after being hit hard by two years of drought.

Compared to August of 2016, prices continued to rise for food and non-alcoholic beverages (13.57 percent vs 12.19 percent in July) and housing and utilities (3.49 percent vs 3.03 percent). Additional upward pressure came from: transport (2.26 percent vs 2.77 percent); clothing and footwear (3.80 percent vs 4.07 percent) and furniture and household equipment (3.23 perecent vs 3.40 percent).

On a monthly basis, consumer prices went up 0.61 percent following a 0.96 drop in the previous month. Cost recovered for food and non-alcoholic beverages (1.04 percent vs -2.05 percent in the previous month), namely tomatoes, spinach, carrots, wheat flour, rice grade one and potatoes. In addition, prices recovered for housing and utilities (0.54 percent vs -0.08 percent), due to a marginal increase in prices of electricity and kerosene. Also, cost of transport rose marginally 0.03 percent, after dropping 0.29 percent in July, affected by higher prices of diesel, despite the fall in petrol cost.


Monday July 31 2017
Kenya Inflation Rate Down to 6-Month Low of 7.47%
Kenya National Bureau of Statistics | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Kenya increased 7.47 percent year-on-year in July of 2017, below 9.21 percent in June and market expectations of 9 percent. It is the lowest inflation rate since January due to a slowdown in food prices. Yet, the inflation slowed for second month in July after hitting a 5-year high of 11.7 percent in May as a severe drought last year destroyed agricultural crops, causing a surge in food inflation.

Year-on-year, prices rose less mainly for food and non-alcoholic beverages (12.19 percent compared to 15.81 percent in June) and transport (2.77 percent compared to 4.23 percent). On the other hand, inflation increased for housing and utilities (3.03 percent compared to 2.96 percent) and clothing and footwear (4.07 percent compared to 3.99 percent) and was steady for furniture and household equipment (3.40 percent).

On a monthly basis, consumer prices dropped 0.96 percent, mainly due to a 2.05 percent fall in cost of food and non-alcoholic drinks.


Monday July 17 2017
Kenya Leaves Monetary Policy Steady
Central Bank of Kenya | Joana Taborda | joana.taborda@tradingeconomics.com

The central bank of Kenya left its benchmark interest rate unchanged at 10 percent on July 17th 2017, in line with market expectations. Policymakers said the decision aims to anchor inflation expectations amid declining food prices, sustained macroeconomic stability, and continued resilience of the economy.

Excerpts from the MPC Press Release:

The Monetary Policy Committee (MPC) met on July 17, 2017, to review the outcome of its policy decisions and recent economic developments. The meeting was held against a backdrop of declining food prices, sustained macroeconomic stability, and continued resilience of the economy. 

Month-on-month overall inflation fell to 9.2 percent in June from 11.7 percent in May 2017, largely due to decreases in food prices, particularly Irish potatoes, kales (sukuma wiki), tomatoes, cabbages, sifted maize flour, sugar, and milk. The fall in prices of these key food items reflected the impact of the recent rains, and Government measures. Non-food-non-fuel (NFNF) inflation has remained below 5 percent over the last seven months, suggesting that demand pressures remain subdued. Overall inflation is expected to continue to decline over the next few months, supported by lower food and fuel prices. 

The economy remained resilient in the first quarter of 2017, recording a growth rate of 4.7 percent relative to the first quarter of 2016. This performance was supported by stable macroeconomic conditions, despite poor performance of the agriculture sector due to adverse weather conditions. Strong performance was recorded in the transport, real estate, construction, mining and quarrying, tourism, and information and communication sectors. This is despite the impact of the slowdown in private sector credit growth. 

The MPC Private Sector Market Perception Survey conducted in July 2017 showed that inflation was expected to decline due to lower food prices and Government interventions already in place. However, there were mixed views with regard to growth in 2017. Non-bank private sector firms expect a stronger growth relative to the May survey, largely due to macroeconomic stability and ongoing public infrastructure investments. On the other hand, banks’ expectations remain unchanged on account of weaker private sector credit growth and concerns over the forthcoming elections. 

The outlook for the global economy remains uncertain, particularly with regard to the direction of U.S. economic and trade policies, normalization of monetary policies in the advanced economies and the Brexit outcome. 

The Committee concluded that the current policy stance remains appropriate. The MPC therefore decided to retain the Central Bank Rate (CBR) at 10.0 percent in order to continue to anchor inflation expectations. The CBK will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.


Friday June 30 2017
Kenya Inflation Rate Slows To 4-Month Low of 9.21%
Kenya National Bureau of Statistics |Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Kenya increased 9.21 percent year-on-year in June 2017, easing from a 11.7 percent rise in the previous month. It is the lowest inflation rate since February, mostly due to a slowdown in prices of fresh food and fuels.

Compared to June of 2016, prices slowed for: food and non-alcoholic drinks (15.81 percent vs 21.52 percent in May); transport (4.23 percent vs 4.64 percent); restaurants and hotels (5.66 percent vs 5.88 percent); miscellaneous goods and services (3.96 percent vs 4.11 percent); recreation and culture (1.51 percent vs 1.80 percent), health (2.85 percent vs 3.10 percent) and education (2.84 percent vs 2.85 percent). In addition, cost increased at the same pace for clothing and footwear (3.99 percent) and communication (0.11 percent).

On the other hand, inflation accelerated for housing and utilities (2.96 percent vs 2.90 percent) and furniture and household equipment (3.40 percent vs 3.28 percent).

Month-on-month, consumer prices declined 1.2 percent compared to a 0.75 percent gain in the previous month. Cost decreased for food and non-alcoholic beverages (-2.74 percent vs 1.26 percent in May), due to a significant falls in prices of potatoes, sukuma wiki, maize flour, cabbages and milk. Also, prices decreased for alcoholic beverages and tobacco (-0.11 percent vs 0.48 percent) and transport (-0.1 percent vs 0.1 percent).


Wednesday May 31 2017
Kenya Inflation Rate At 5-Year High of 11.7% In May
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Kenya jumped 11.70 percent year-on-year in May of 2017, accelerating from a 11.48 percent increase in the previous month. The inflation rate remained the highest since May 2012, mainly driven by rising prices of food, due to last year's severe drought which destroyed agricultural crops.

Compared to May of 2016, prices advanced faster for: food and non-alcoholic drinks (21.52 percent vs 20.98 percent in April); furniture and household equipment (3.28 percent vs 3.10 percent); restaurants and hotels (5.88 percent vs 5.65 percent), miscellaneous goods and services (4.11 percent vs 3.55 percent); communication (0.11 percent vs 0.10 percent); health (3.10 percent vs 3.05 percent) and alcoholic drinks, tobacco and narcotics (3.62 percent vs 3.26 percent). 

Meanwhile, inflation slowed for housing and utilities (2.90 percent vs 2.94 percent); transport (4.64 percent vs 5.11 percent); clothing (3.99 percent vs 4.01 percent); recreation and culture (1.80 vs 1.99 percent) and was steady for education (2.85 percent).

Month-on-month, consumer prices went up 0.75 percent compared to a 1.79 percent gain in the previous month. Cost went up at a softer pace for food and non-alcoholic beverages (1.26 percent vs 3.55 percent in April), due to a significant declines in prices of sukuma wiki, cabbages, potatoes and spinach, related to ongoing rains. Also, cost eased for housing, water, electricity, gas and other fuels (0.06 percent vs 0.63 percent), led by a slowdown in house rents and cooking fuels.


Monday May 29 2017
Kenya Holds Key Rate At 10%
Central Bank of Kenya | Joana Taborda | joana.taborda@tradingeconomics.com

The Central Bank of Kenya held its benchmark bank rate steady at 10 percent at its May 29th 2017 meeting, in line with market expectations. Policymakers said inflation is expected to remain above the 2.5-7.5 percent target in the near term although food prices are likely to ease amid improved weather conditions.

Excerpts from the MPC Press Release:

The meeting was held against a backdrop of improved weather conditions, expectations of lower food prices, and general macroeconomic stability. 

The inflation rate rose to 11.5 percent in April from 10.3 percent in March 2017, due to increases in food prices, notably sifted maize flour, sugar, kales (sukuma wiki) and tomatoes. Nevertheless, the recent rains and interventions by the Government are expected to provide some relief. Non-food-non-fuel (NFNF) inflation remained stable below 5 percent, suggesting that demand pressures and pass-through effects of high food prices are muted.

The foreign exchange market has remained stable, supported by a narrower current account deficit. Receipts from tea and horticulture are  resilient despite lower export volumes due to adverse weather conditions in the first quarter of 2017. Additionally, receipts from tourism, coffee exports, and diaspora remittances have remained strong. 

Although a modest pick-up in global growth is expected in 2017 there are considerable risks to the outlook. Uncertainties remain on the economic policies of the U.S. administration, the Brexit outcome, and normalization of monetary policy in the advanced economies. These risks also have potential implications on global financial market stability.

The Committee concluded that overall inflation is expected to remain above the Government target range in the near term due to elevated prices for some food items. Nevertheless, the prevailing policy stance had reduced the threat of demand driven inflation. The MPC therefore decided to retain the Central Bank Rate (CBR) at 10.0 percent. The Committee will continue to closely monitor developments in the domestic and global economies, and stands ready to take additional measures as necessary.