November Inflation Rate Hits 5.6 Percent Up from 5.5 Percent in October

The Y/Y inflation rate for the month of November increased to 5.6 percent, a negligible increase from 5.5 percent recorded in October.

The registered rate contradicts the projections of 5.7 percent to 6.1 percent, as highlighted by Cytonn Weekly Report #45/2018.

The variance was due to a 1.2 percent decline in the housing, water and electricity, gas and other fuels index against our expectations of a marginal rise by 0.2 percent.

The Y/Y rise was mainly due to the base effect as inflation was on a decline in the last quarter of 2017.

M/M inflation, however, declined by 0.2 percent, attributed to a 0.2 percent decline in the food and non-alcoholic beverages index coupled with a 1.2 percent decline in the housing, water, electricity, gas and other fuels index.

The decline in the food index was attributed to a decline in the prices of some foodstuffs, which outweighed the increase recorded in others with sugar and cabbages declining by 2.2 percent and 4.4 percent.

The 1.2 percent decline in the housing, water, electricity, gas and other fuels index was driven by lower prices of electricity during the month.

The cost of consumption of 50 KWh of electricity declined by 31.4 percent to 758.0 shillings in November, from 1,105.0 shillings in October 2018.

Transport costs, however, increased during the month on account of increased pump prices of petrol that outweighed the drop in diesel prices.