Inflation Likely to be Higher than the CBK Projections

The skyrocketing prices of foodstuffs and fuel are likely to push the inflation higher this month that earlier projected by the Central Bank of Kenya.

On Tuesday, the Energy Regulatory Commission announced a significant increase in fuel prices further signifying some tough times ahead for Kenyans even as the economy continues to wade through the storm.

According to ERC, a liter of Petrol will now retail at 100.27, up from 96.01 shillings with that of Diesel now going for 89.26 shillings up from 84.23 shillings and Kerosene is now up by 3.75 shillings to retail at 67.19 shillings.

The increase in fluke prices is set to affect the already worse situation in terms of food prices and electricity bills. At the moment, Kenyans are paying higher amounts of money for foodstuffs and electricity and according to economic analysts, this could push the inflation to a historical mark of above 7.5 percent.

A two-kilogram of maize flour is now retailing at between 130 shillings and 150 shillings while one kilogram of pishori rice is going for between 140 and 160 shillings with power bills having been increased by 1.8 shillings per unit. The sharp increase in prices of maize flour, a basic commodity in more that 90 percent of Kenyan households is sending shivers down the spines of Kenyans even as the government contemplates on importing maize from other countries.

Kenyans are also paying more for electricity due to higher uptake of thermal power due to falling water levels in hydropower dams. The fuel levy component on power bills stands at Sh2.85 per unit since December, which is a 16-month high.

The ongoing drought has further complicated matters with the prices of maize moving out through the window for most households. In Bungoma for instance, prices of maize, the main meal in the region have soared so high that most households are unable to afford. A two-kilogram tin of dry maize is retailing between 120 shillings and 140 shillings.