Kenya’s inflation rate expected to breach 7.5pc by September -CBK

by Amina Faki

Kenya’s inflation is likely to drop into the government’s preferred band of 2.5-7.5 percent within the next two months according to the Central Bank of Kenya Governor.

“Within two months, the overall inflation rate will fall below the 7 percent mark,” said Dr. Patrick Njoroge, the chairman, Monetary Policy Committee (MPC) on Tuesday.”We expect it to breach 7.5 percent within this quarter.”

On a month-to-month basis, the overall inflation rate fell to 9.2 percent in June from 11.7 percent in May 2017.

According to the National Bureau of Statistics, the overall inflation fell in the month of June 2017 largely due to the decrease in food prices, reflecting on the impact of rains, and Government measures.

“The Consumer Price Index decreased by 1.2 percent from 187.64 in May to 185.39 in June 2017. The overall year on year inflation was 9.21 percent in June 2017,” noted the KNBS report.

The table below shows the consumer price index and inflation rate for a period of twelve months from June 2016 to June 2017.

The decline in the rate of inflation was attributed to;

1. Drop in food prices (Basic food commodities) supported by the recent rains and government policy.

2. Strong performance in Q’12017 at 4.7 percent compared to 5.3 percent in Q’12016.

3. Better performance in the non-agriculture sectors (Mining, tourism and restaurants, information and communication, real estate etc). “Even on a slow credit, there’s been a lot of vibrancy and dynamism in the non-agricultural sectors.The manufacturing sector recorded significant growth

4. Decline in the international oil prices that has simultaneously led to lower fuel prices