Kenya’s inflation rate to decline further between 8pc-9pc range – Analysts

Analysts at Cytonn Investments and Genghis Capital have predicted that the July inflation rate will drop between 8.5 percent  and 9.00 percent respectively from from 9.2 percent recorded in the month of June.

According to Cytonn, the drop will mainly be driven by a decline in food and fuel prices.

“Going forward to the end of 2017, we expect inflationary pressures to be subdued given food prices are expected to continue to decline because of the rainfall witnessed during the long rains period, albeit depressed, and low global oil prices due to rising US oil production, which has suppressed the global recovery of oil prices, countering OPEC’s decision to extend the deal to cut down on oil production,” they note in their weekly investor brief.

Read: Delayed poor long rains to worsen Kenya’s food security – FAO 

On the other hand,Genghis Capital expect the single-digit inflation to protract into the month buoyed by a decline in food inflation due to an improving weather conditions and the trickle down-effect of the government subsidy on maize staple.  “We also expect fuel inflation to remain muted and come in below 3.50% y/y weighed down by the fall in global oil prices.”

The Kenya National Bureau of Statistic (KNBS) had revealed that inflation rate dropped to 16.25 per cent in May 2017, 0.99 per cent lower than 17.24 per cent recorded in April.

Besides the Central Bank of Kenya being optimist that the inflation will breach the 7.5 percent by September, Cytonn state that, although they expect inflationary pressures to ease in the second half of 2017, but average 9.5 percent over the course of the year, which is above the upper bound of the government target range of 2.5 percent  – 7.5 percent.