Inflation Rate For The Month of July To Hit 6.6 Percent

By Juma / Published July 22, 2019 | 12:38 am

Cytonn Investments has projected that the inflation rate for the month of July will fall between 6.2 and 6.6 percent from 5.7 percent recorded in June.

Cytonn expects a rise in food and non-alcoholic beverages index for the month of July.

The current weighting of food and non-alcoholic beverages stands at 36 percent driven by a rise in food prices, especially grain and maize flour.

The price of maize flour is still high across the country due to the increased prices of maize. A 2-kilogram packet of maize flour is retailing at between 120 and 125 shillings from 87 shillings.

The month of July is likely to experience a marginal rise in the transport index. The price of petrol was increased by 0.3 percent despite a decline of 0.8 percent in diesel prices.

Any rise in the prices of fuel, especially diesel, often affect the price of basic commodities as manufacturers carry the increased cost to the consumer.

A decrease in fuel prices, however, has often yielded little benefits for the common man, especially those using public transport because PSV owners rarely reduce the traveling cost.

“Going forward, we expect the inflation rate to remain within the government set range of 2.5 and 7.5 percent,” said Cytonn in their weekly report.

Fixed income market

Rates in the fixed income market have remained relatively stable as the government moved to reject expensive bids.

A budge deficit is likely to result from a depressed revenue collection with the revenue target for the 2019/2020 financial year being at 2.1 trillion shillings.

“Despite this, we do not expect upward pressure on interest rates due to increased demand for government securities, driven by improved liquidity in the market,” said Cytonn Investments.

Analysts are of the view that investors will be biased towards medium-term fixed income instruments to reduce duration risk associated with long-term debt coupled with the relatively flat yield curve on the long-end due to saturation of long-term bonds.

About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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