Kenya’s inflation rate edged up to 2.8% in November, marking the first increase since August, driven by rising food prices, according to the Kenya National Bureau of Statistics. This follows a 2.7% annual increase in October, with prices growing 0.3% over the month.
The rise in inflation comes ahead of the central bank’s monetary policy committee meeting on Dec. 5 to announce its latest interest rate decision. Despite the uptick, inflation remains near the lower boundary of the 2.5% to 7.5% target range preferred by Central Bank Governor Kamau Thugge for stabilizing price expectations.
Food and non-alcoholic beverages, which constitute a third of the inflation basket, experienced a 4.5% annual price hike due to increased costs of vegetables such as cabbages, carrots, and potatoes. Meanwhile, the transport index dropped by 1.1% as gasoline prices were left unchanged during the mid-month review, and the housing, water, electricity, gas, and other fuels index rose slightly by 0.1%, reflecting higher costs for international flights.
Key Factors Influencing Inflation:
- Agricultural Surplus: Ongoing corn harvests in Kenya’s breadbasket regions may yield the first surplus of the staple in a decade, potentially stabilizing corn prices.
- Tax Proposals: The government’s plan to reintroduce previously scrapped taxes, including value-added tax on fertilizer and pest control products, could increase agricultural input costs, potentially undermining food security.
- Telecommunication Levies: A proposed hike in levies on telecom services may raise communication costs, with mobile airtime alone accounting for 5.5% of the inflation basket.
- Currency Strength: The Kenyan shilling, among the best-performing currencies globally this year, has appreciated by 20% against the dollar since 2023, helping to reduce import costs for fuel and other goods.
These factors are expected to play a critical role in shaping Kenya’s inflation trajectory and economic policy decisions in the coming months.
