Cytonn Investments Limited has projected a high inflation rate for the month of February in their latest report.
“We are projecting the inflation rate for the month of February to range between 4.6 percent – 4.8 percent from 4.8 percent in January,” said Cytonn.
According to Cytonn, the year-to-year inflation rate is expected to decline as a result of a base effect. On the other hand, the month-to-month inflation is expected to rise mainly due to:
- An increase in prices of kerosene, diesel and petrol by 2.6, 2.3 and 1.5 percent respectively effective from 15th February to 14th March
- An increase in electricity prices, as Hydro-Electric Power (HEP) generation, remains low and diesel-powered thermal generators used to fill in the gap result in a rise in the cost of electricity production with the increase in the cost of diesel
READ: With Fuel Prices so high, are Inflation Figures Being Given True?
- An increase in food prices with pressure from the rice shortage and the pass-through effect from transport costs increasing; despite maize flour prices remaining steady supported by cheap imports from Tanzania and Uganda, and the decline in wheat flour prices, now retailing at the same price as maize flour.
Cytonn says that the inflation will also be affected by the threat of a drought brought about by La Nina, currently developing in the Equatorial Pacific Ocean.
READ: Rising Food Prices Pushes Inflation Up Marginally to 4.83 Percent in January
“We expect inflation to average 7.5 percent over the course of the year down from 8.0 percent in 2017, which is within the government target range of 2.5 percent – 7.5 percent,” said Cytonn.