Commodity: A Look at Global Prices and Whether Kenya Fits into Brackets

Global commodity prices were generally on a recovery trend in Q1’2018 according to the World Bank Commodity Prices Index.

The energy and agriculture segments gained 3.5 percent and 4.4 percent, respectively, during the quarter and the metals and minerals experienced a gain of 5.4 percent.

The gains in energy were majorly driven by the recovery in oil prices, owing to disruptions in the production of oil in some oil producing areas due to conflict and the extension of the OPEC agreement to cut oil supply.

Below is a chart showing the performance of select commodity prices average for quarter one 2018.

According to the Kenya National Bureau of Statistics’ monthly Consumer Price Indices (CPI) and rates of inflation, for March, 2018, the overall year on year inflation stood at 4.18 per cent in March 2018 down from 4.46 percent in February.

According to KNBS, between February and March 2018, Food and Non-Alcoholic Drinks’ Index increased by 1.54 percent due to the increase in prices of some foodstuffs which outweighed decreases recorded in respect to others.

The year on year food inflation however, decreased from 3.83 percent in February 2018 to 2.19 percent in March 2018.

Housing, Water, Electricity, Gas and Other Fuels’ Index, increased by 3.78 percent in March 2018 compared to February 2018 with this mainly attributed to significant increase in prices of cooking fuels.

Notable, charcoal recorded a 27.1 percent increase in price during the review period. The rise in the cost of electricity was attributed to rise in fuel cost adjustment charges per KWh of consumption.

During the same review period, the Transport Index decreased by 0.06 percent mainly on account of reduction in pump prices of petrol.

With the global commodity prices having gone down, will Kenya’s commodity market recover fully given that the inflation rates are going down too?