Monday October 01 2018
Kenya Annual Inflation Rate at 11-Month High in September
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Kenya increased to 5.7 percent year-on-year in September of 2018 from 4.0 percent in the previous month and above market expectations of 4.95 percent. It was the highest inflation rate since October last year, mainly due to higher cost of transport and food & non-alcoholic beverages. In September, at the beginning of the month a 16 percent tax on petroleum products was introduced, due to the impacts it had the Parliament approved President Uhuru Kenyatta proposal of cut the VAT to 8 percent.

Year-on-year, cost of food and non-alcoholic beverages increased by 0.5 percent, after dropping 1.15 percent in August. Additionally, prices advanced faster for transport (17.29 percent compared to 9.37 percent); housing & utilities (17.44 percent compared to 16.70 percent); clothing & footwear (4.58 percent compared to 4.17 percent); furnishings and household equipment (4.86 percent compared to 4.63 percent); miscellanous goods & services (4.30 percent compared to 4.20 percent); restaurants & hotels (5.04 percent compared to 5.0 percent); health (5.90 percent compared to 5.69 percent);  recreation & culture (1.61 percent compared to 1.55 percent) and alcoholic beverages & tobacco (6.48 percent compared to 5.80 percent). 

On the other hand, prices slowed for communications (0.61 percent compared to 0.62 percent) and  education (5.04 percent compared to 5.11 percent). 

On a monthly basis, consumer prices advanced by 1.02 percent, following a 0.31 percent gain in August. Cost of food & non-alcoholic beverages rebounded (0.37 percent compared to -0.66 percent) boosted by higher prices of some foodstuffs. Also, prices of transport jumped (7.99 percent compared to 0.87 percent), driven by higher cost of petrol (2.6 percent compared to 1.3 percent) and diesel (5.1 percent compared to -0.5 percent). In contrast, prices eased for housing & utilities (0.47 percent compared to 2.56 percent).




Tuesday September 25 2018
Kenya Leaves Interest Rate Unchanged at 9%
Central Bank of Kenya | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Central Bank of Kenya held its benchmark interest rate steady at 9.0 percent at its September 25th 2018 meeting, as widely expected and after trimming it by 50 bps in the previous meeting. Policymakers noted inflation expectations remained well anchored within the target range, still they will continue to monitor closely the inflationary effects from the VAT on petroleum products.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained within the target range in July and August 2018, largely due to lower food prices. The inflation rate fell to 4.0 percent in August from 4.4 percent in July, following decreases in food prices which offset the increase in energy prices, including the increase in the price of charcoal. Nonfood-non-fuel (NFNF) inflation remained below 5 percent, indicating that demand-driven inflationary pressures remain muted. Overall inflation is expected to rise in the near term, following the implementation of VAT on petroleum products in September 2018 and its impact on other prices, as well as increases in international oil prices. However, it is expected to remain within the target range due to lower food prices reflecting favorable weather.

The MPC Private Sector Market Perception Survey conducted in September 2018 showed that inflation expectations were well anchored within the target range in the near term on account of lower food prices. However, respondents expected inflation to rise slightly due to higher energy prices attributed to the impact of the VAT on petroleum products and increases in international oil prices. The Survey indicated sustained optimism for stronger growth in 2018 and an improved business environment. Respondents attributed this optimism to, among others, a rebound in agriculture, pick-up in private sector economic activity, focus by the Government on the Big 4 priority sectors, strong forward hotel bookings, renewed business confidence due to the ongoing war against corruption, and a stable macroeconomic environment. The optimism was tempered by the expected impact of the VAT on petroleum products on the cost of doing business.

The Committee noted that inflation expectations remained well anchored within the target range, but concluded that there was need to monitor the second-round inflationary effects arising from the VAT on petroleum products, and 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.




Friday August 31 2018
Kenya Inflation Rate Slows to 5-Month Low in August
Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Kenya decreased to 4.04 percent in August of 2018 from 4.35 percent in the previous month and above market expectations of a 4.35 percent gain. It was the lowest inflation rate since March, mainly due to a fall in prices of food and non-alcoholic beverages.

Year-on-year, cost of  food and non-alcoholic beverages declined by 1.15 percent, after rising 0.53 percent in July. Also, prices eased for furnishings and household equipment (4.63 percent compared to 4.66 percent); health (5.69 percent compared to 6.18 percent) and communications (0.62 percent compared to 0.82 percent). In contrast, prices advanced faster for housing & utilities (16.70 percent compared to 14.40 percent); transport (9.37 percent compared to 8.45 percent); clothing & footwear (4.17 percent compared to 4.10 percent); miscellanous goods & services (4.20 percent compared to 4.01 percent); restaurants & hotels (5.0 percent compared to 4.75 percent); recreation & culture (1.55 percent compared to 1.45 percent) and alcoholic beverages & tobacco (5.80 percent compared to 2.86 percent). Additionally, inflation was steady for education (5.11 percent, the same as in July).

On a monthly basis, consumer prices went up 0.31 percent, following a 0.89 percent decrease in July. Cost of food & non-alcoholic beverages dropped at a softer pace (-0.66 percent compared to -2.40 percent). In addition, prices rose faster for housing & utilities (2.56 percent compared to 0.12 percent), due to higher cost of electricity (6.6 percent) and transport (0.87 percent compared to 0.62 percent), driven by an increase in the pump price of petrol (1.3 percent).


Wednesday August 01 2018
Kenya Inflation Rate Rises to 4.35% YoY in July
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Kenya rose to 4.35 percent in July of 2018 from a 4.28 percent June, reaching its highest level since February. Prices increased faster mostly due to housing and utilities and transport. On a monthly basis, consumer prices fell 0.89 percent in July, unchanged from the previous month.

Year-on-year, cost advanced further for housing & utilities (14.40 percent compared to 14.17 percent in June); transport (8.45 percent compared to 7.47 percent); furnishings and household equipment (4.66 percent compared to 4.64 percent); health (6.18 percent compared to 4.22 percent) and alcoholic beverages & tobacco (2.86 percent compared to 2.77 percent). On the other hand, cost slowed for food and non-alcoholic beverages (0.53 percent compared to 0.90 percent); clothing & footwear (4.10 percent compared to 4.17 percent); restaurants & hotels (4.75 percent compared to 4.77 percent); miscellanous goods & services (4.01 percent compared to 4.12 percent); communications (0.82 percent compared to 0.85 percent) and recreation & culture (1.45 percent compared to 1.52 percent). Also, inflation was steady for education (5.11 percent, the same as in June).

On a monthly basis, consumer prices declined 0.89 percent, the same as in the previous month. Prices decreased for food & non-alcoholic beverages (-2.40 percent compared to -2.20 percent), driven by a drop in prices of some foodstuffs, mainly tomatoes  (-21.67 percent), maize grain loose (-3.04 percent) and beans (-1.74 percent). Additionally, cost eased for housing & utilities (0.12 percent compared to 0.52 percent). In contrast, cost of transport went up at a faster pace (0.62 percent compared to 0.37 percent), boosted by an increase in the pump price of petrol (3.10 percent).


Monday July 30 2018
Kenya Trims Interest Rate by 50 Bps to 9.0%
Central Bank of Kenya | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Central Bank of Kenya lowered its benchmark interest rate by 50 bps to 9.0 percent at its June 30th 2018 meeting, surprising markets who expected no changes. It is the second cut so far this year, bringing borrowing cost to the lowest since 2015. The Committee noted that there was some room for further accommodative monetary policy as inflation expectations were well anchored within the target range and economic output was below its potential level.

Excerpts from the MPC Press Release:

Month-on-month overall inflation remained within the target range in May and June 2018 largely due to lower food prices. The inflation rate was 4.3 percent in June compared to 4.0 percent in May 2018, mainly reflecting increases in energy prices. Non-food-non-fuel (NFNF) inflation remained below 5 percent, indicating that demand-driven inflationary pressures are muted. Higher domestic fuel prices due to the recent increase in international oil prices, and the impact of the excise tax indexation on prices of some of the CPI items are expected to exert moderate upward pressure on inflation in the near term. Nevertheless, overall inflation is expected to remain within the target range mainly due to expectations of lower food prices reflecting favorable weather conditions. 

Data for the first quarter of 2018 showed a strong pickup of the economy, with real GDP growth of 5.7 percent compared to 4.8 percent in the first quarter of 2017. This outcome was driven by a strong recovery in agricultural activity due to improved weather conditions, a recovery of the manufacturing sector, and resilient performance of the services sector particularly wholesale and retail trade, real estate, and tourism. Growth in 2018 is expected to be strong, supported by continued recovery in agriculture, a resilient services sector, alignment of Government spending to the Big 4 priority sectors, and the stable macroeconomic environment.

The MPC Private Sector Market Perception Survey conducted in July 2018 indicated that inflation expectations were well anchored in the near term on account of lower food prices, but was expected to rise slightly due to higher energy prices and the impact of recent tax measures. The Survey indicated sustained optimism for stronger growth in 2018 and an improved business environment. Respondents attributed this optimism to, among others, a rebound in agriculture, completion of key infrastructure projects, focus by the Government on the Big 4 priority sectors, strong forward hotel bookings, renewed business confidence, and a stable macroeconomic environment.

The MPC noted that inflation expectations were well anchored within the target range, and that economic growth prospects were improving. Furthermore, economic output was below its potential level, and there was some room for further accommodative monetary policy. Consequently, while noting the risk of perverse outcomes, the Committee decided to lower the Central Bank Rate (CBR) to 9.00 percent from 9.50 percent. The MPC will closely monitor the impact of this change in its policy stance. Other developments in the domestic and global economy will also be observed, and the MPC stands ready to take additional measures as necessary.


Friday June 29 2018
Kenya Inflation Rate Rises to 4-Month High in June
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Kenya increased to 4.28 percent in June of 2018 from 3.95 percent in May, below market expectations of 5.3 percent. It was the highest inflation rate since February, mainly due to higher prices of food and non-alcoholic beverages and housing and utilities. On a monthly basis, consumer prices fell 0.89 percent, after a 0.97 percent gain in the previous month.

Compared to May of 2017, cost went up further for food and non-alcoholic beverages (0.90 percent compared to 0.34 percent in May); housing & utilities (14.17 percent compared to 13.73 percent); transport (7.47 percent compared to 7.01 percent) and furnishings and household equipment (4.64 percent compared to 4.51 percent). Additionally, prices rose faster for communications (0.85 percent compared to 0.82 percent); education (5.11 percent compared to 5.07 percent); health (4.22 percent compared to 3.98 percent) and alcoholic beverages & tobacco (2.77 percent compared to 2.25 percent). In contrast, cost eased for clothing & footwear (4.17 percent compared to 4.27 percent); restaurants & hotels (4.77 percent compared to 4.92 percent); miscellanous goods & services (4.12 percent compared to 4.19 percent) and recreation & culture (1.52 percent compared to 1.53 percent). 

On a monthly basis, consumer prices dropped 0.89 percent, after a 0.97 percent increase May. Cost declined for food & non-alcoholic beverages (-2.2 percent compared to 1.35 percent), mostly due to a fall in prices of some foodstuffs outweighed, namely gren maize (-25.85 percent), onions (-18.20 percent) and potatoes (-15.08 percent). Also, prices slowed for housing & utilities (0.52 percent compared to 1.79 percent), driven by electricity charges (-4.99 percent). Meanwhile, cost of transport advanced at a faster pace (0.37 percent compared to 0.10 percent), boosted by higher prices of petrol and diesel.


Thursday May 31 2018
Kenya Inflation Rate Edges Up to 3.95% in May
Kenya National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The inflation rate in Kenya increased to 3.95 percent year-on-year in May 2018, quickening from 3.73 percent in April. Prices rose faster mainly for food and housing & utilities while were stable for transport.

Compared to May of 2017, inflation rate picked up primarily for food and non-alcoholic beverages (0.34 percent vs 0.26 percent in April) and housing & utilities (13.73 percent vs 11.80 percent). In addition, prices continued to advance clothing & footwear (4.27 percent vs 4.09 percent); health (3.98 percent vs 3.48 percent); communications (0.82 percent vs 0.79 percent) and recreation & culture (1.53 percent vs 1.40 percent). 

Meanwhile, cost was stable for transport (7.01 percent) while slowed for furnishings (4.51 percent vs 4.61 percent); restaurants & hotels (4.92 percent vs 6.04 percent); miscellanous goods & services (4.19 percent vs 4.74 percent); education (5.07 percent vs 5.09 percent) and alcoholic beverages & tobacco (2.25 percent vs 2.79 percent).

On a monthly basis, consumer prices rose 0.97 percent, easing from a 1.35 percent increase in April. Cost went up less for food & non-alcoholic beverages (1.35 percent vs 1.59 percent), as prices of some foodstuffs outweighed decreases recorded in others. In particular, the biggest increases in prices were seen for tomatoes (15.47 percent to KES 120.4 per kilo) and spinach (5.5 percent to KES 69.12 per kilo) while the main decline was recorded for maize flour (-4.38 percent to KES 59.99 per kilo). Also, prices advanced less for housing & utilities (1.79 percent vs 3.24 percent), despite the increase in prices of cooking fuels, namely charcoal which recorded the highest rise of 9.66 per cent. Meantime, cost rose 0.10 percent for transport (0.16 percent in April), amid increases in the pump price of petrol which offset a decrease in diesel prices.


Monday May 28 2018
Kenya Holds Interest Rate Steady at 9.5%
Central Bank of Kenya | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Central Bank of Kenya kept its benchmark interest rate steady at 9.5 percent at its May 28th 2018, meeting, surprising markets who expected a 50 bps cut. The move follows a 50 bps slash in the previous meeting, as policymakers noted that the decision of cutting the interest rate in March still needs to be transmitted to the economy.

Excerpts from the MPC Press Release:

Month-on-month overall inflation fell to 3.7 percent in April 2018 from 4.2 percent in March 2018 largely due to lower food prices particularly for Irish potatoes, cabbages, and sugar. The decrease in food prices outweighed the increases in energy prices. Non-food-non-fuel (NFNF) inflation rose slightly, but remained below 5 percent indicating that demand driven inflationary pressures are muted. The rising international oil prices and the impact on domestic fuel prices are expected to continue exerting moderate upward pressure on inflation. Nevertheless, overall inflation is expected to remain within the Government target range mainly due to the expected further decline in food prices following improved weather conditions.

The MPC Private Sector Market Perception Survey conducted in May 2018 showed that inflation was expected to decline in the near term on account of lower food prices. The Survey revealed sustained optimism for stronger growth in 2018 and improved business environment. Respondents attributed this optimism to, among others, a stable macroeconomic environment, favourable weather conditions, continued public spending on infrastructure, focus by the Government on the Big 4 priority areas, and the expected direct flights to the U.S. However, respondents’ optimism was tempered by concerns that recent floods in many parts of the country may negatively affect crop yields and tourism in the short term.

The MPC noted that inflation expectations were well anchored within the Government target range, economic output was below its potential level, and there was some room for accommodative monetary policy. The Committee assessed that the policy action at its March meeting (a reduction of the Central Bank Rate by 50 basis points) was yet to be fully transmitted to the economy, including a determination of any perverse outcomes. The Committee therefore decided to retain the CBR at 9.50 percent. The MPC will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.


Monday April 30 2018
Kenya Inflation Rate Lowest Since 2013
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in Kenya increased 3.73 percent year-on-year in April of 2018, easing from a 4.18 percent rise in the previous month. It was the lowest inflation rate since January of 2013, as prices slowed for food and non-alcoholic beverages amid good weather conditions and the strengthening of the currency.

Compared to April of 2017, prices eased for food and non-alcoholic beverages (0.26 percent from 2.19 percent in March); restaurant and hotels (6.04 percent from 6.61 percent) and communication (0.79 percent from 0.81 percent). In contrast, cost advanced further for housing and utilities (11.80 percent from 8.98 percent); transport (7.01 percent from 6.61 percent); clothing and footwear (4.09 percent from 3.85 percent) and furnishings and household equipment (4.61 percent from 4.25 percent). Also, prices went up faster for miscellaneous goods and services (4.74 percent from 4.61 percent) and education (5.09 percent from 5.08 percent).

On a monthly basis, consumer prices edged up 1.35 percent, after rising 1.39 percent in the prior month. Prices increased at a softer pace for housing and utilities (3.24 percen from 3.78 percent), mostly due to a decrese in kerosene prices (-0.94 percent). On the other hand, cost of food and non-alcoholic beverages continued to rise (1.59 percent from 1.54 percent), namely some foodstuffs and cost of transport rebounded (0.16 percent from -0.06 percent).


Friday March 30 2018
Kenya Inflation Rate Edges Down to 4.18% in March
Kenya National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in Kenya advanced 4.18 percent year-on-year in March of 2018, slowing from a 4.46 percent increase in the prior month. It was the lowest inflation rate since May of 2013, as prices of food, transport and furnishing and household equipment eased.

Compared to March of 2017, prices rose at softer pace for food and non-alcoholic beverages (2.19 percent compared to 3.83 percent in February); transport (6.61 percent compared to 6.95 percent); furnishings and household equipment (4.25 percent compared to 4.29 percent) and restaurant and hotels (6.61 percent compared to 6.87 percent). On the other hand, cost increased further for housing and utilities (8.98 percent compared to 5.74 percent); clothing and footwear (3.85 percent compared to 3.81 percent) and miscellaneous goods and services (4.61 percent compared to 4.58 percent). Also, inflation was steady for communication (0.81 percent, the same as in February) and education (5.08 percent). 

On a monthly basis, consumer prices went up 1.39 percent, following a 1.36 percent rise in the previous month. Cost advanced faster for housing and utilities (3.78 percent compared to 0.41 percent in February), mainly due to higher prices of cooking fuels and electricity. Meanwhile, prices slowed for   food and non-alcoholic beverages (1.54 percent compared to 2.22 percent) and cost of transport fell (-0.06 percent compared 0.84 percent), due to a reduction in pump petrol prices.