Inflation Rate for The Month Of August Down To 5.0 Percent

The y/y inflation for the month of August declined to 5.0 percent from 6.3 percent recorded in July, which was not in line with “our projections of a decline to 5.7 – 6.1 percent.”

Early during the month, Cytonn Investments had told Kenyans to expect a 1.0 percent decline in the food & non-alcoholic beverages index and 0.6 percent rise in the housing, water, electricity, gas and other fuels index compared to the 1.9 and 0.1 percent declines recorded, respectively.

In August, according to Kenya National Bureau of Statistics (KNBS), there was a 1.9 percent decline in the food and non-alcoholic drinks’ index, due to a decrease in prices of significant food items including sukuma wiki (kales), potatoes, cabbages, carrots, tomatoes and maize grain loose which decreased by 8.0%, 7.8%, 6.8%, 6.0%, 4.9% and 2.8%, respectively,

There was also a 0.1 percent decline in the housing, water, electricity, gas and other fuels index, as a result of a decrease in prices of some cooking fuels.

August also experienced a 0.03 percent decline in the transport index on account of the reduction in pump prices of diesel and petrol by 3.1 and 2.5 percent respectively.

Interbank Rate                              

Liquidity in the money markets remained favorable during the month of August, despite the average interbank rate rising to 3.6 percent, from 2.3 percent in July.

The rise in interbank rate was supported by government payments, which offset tax payments according to Cytonn Investments.

During the week, the average interbank rate rose to 4.6 percent from 3.4 percent recorded the previous week, pointing to declined liquidity in the money markets.

The average interbank volumes declined by 19.1 percent to 11.8 billion shillings from 14.6 billion shillings recorded the previous week.

Kenyan Eurobonds

During the month, the yields on the 10-year and 30-year Eurobond issued in February 2018 rose by 0.2 percent points to close at 6.7 and 8.1 percent from 6.5 and 7.9 percent in July 2019 respectively.

During the week, the yield on the 10-year Eurobond remained unchanged at 6.7 percent while the yield on the 30-year Eurobond rose by 0.1 percentage point to 8.1 percent from 8.0 percent recorded in the previous week.

During the month, the yields on the newly issued dual-tranche Euro-bond with 7-years increased by 0.1 percent points while the 12-year Eurobond increased by 0.3 percentage points to 7.4 percent from 7.1 percent recorded in July 2019.

During the week, the yields on the 7-year Eurobond remained unchanged at 6.2 percent while the 12-year Eurobond rose by 0.2 percentage points to 7.4 percent from 7.2 percent respectively.