Treasury Maintains Inflation Target at 2.5 -7.5 For The 7th Year Running

By Soko Directory Team / Published July 25, 2019 | 6:49 am

The National Treasury intends to maintain the inflation rate at 2.5 to 7.5 percent as it has been in the last seven years.

The inflation target, according to the ministry, is set to be at five percent, but with a flexible margin of 2.5 percent. That is 2.5 percent on the lower side and 7.5 percent on the higher side, as noted from National Treasury Ministry notice to the Central Bank of Kenya (CBK).

The inflation target is usually determined by the Consumer Price Index (CPI) in 12 months, a report that is usually published by the Kenya National Bureau of Statistics (KNBS).

As at now, the inflation rate seems to be heading towards surpassing the set inflation target. In such cases, the CBK sees this as a sign to increase interest rates to try and stabilize the economy.

In the event that inflation rate shoots below the set target rates, the CBK interprets it as a time to lower the interest rates.

Already, the cost of living for Kenyans is on the higher side with prices of food way higher than before but is reportedly at a preferred level.

By June, the inflation rate was measured at 5.7 percent, up from the 5.49 percent that had been recorded in May.

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This may have been due to the short rains experienced in the country that cause the prices of some foodstuffs to increase.

Some of the foodstuffs that have pushed the inflation rate by their higher prices are beans, green grams and the price of sifted maize flour.

The Kenya National Bureau of Statistics (KNBS) in its report on inflation in the month of June, noted that it is the increase in the prices of maize flour, beans, green grams among other foodstuffs that have increased inflation rate even though Kenyans had enjoyed the reduced prices of vegetables.

According to KNBS, in the month of June, prices of vegetables such as spinach reduced by 2.42 percent, kales price reduced by 6.87 percent while tomatoes price reduced by 0.36 percent

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