February Inflation Surpasses Projections, Closes at 6.37%

The year on year (y/y) inflation for the month of February shot to 6.37 percent from 5.78 percent recorded in January and surpassing projections made by various analysts.

Investment and analysis firm, Cytonn Investments had in January projected that the y/y inflation would fall in between 5.9 – 6.2 percent.

The marginal variance between inflation projections and the actual inflation for the month of February was mainly attributed to an underestimation of the increase in the prices of food and non-alcoholic beverages.

This is the highest inflation growth recorded in the last one year, since 6.58 percent in April 2019.

The price of tomatoes largely contributed to the increase in inflation for the month of February where the Kenya National Bureau of Statistics (KNBS) reports that prices shot up by 29.6 percent.

Prices of tomatoes went up as high as 30 shillings for one piece and elicited reactions from citizens across Nairobi, who were hit hardest by the prices.

The prices of onions and spinach also increased by 7.3 percent, and 3.2 percent, respectively and contributed to the growth in the food index.

Stats from Cytonn Investments’ weekly report indicate that there was also a 0.5 percent increase in the housing, water, electricity, gas and other fuels index was recorded, as a result of an increase in the cost of house rent by 0.2 percent.

A 0.3 percent increase in the transport index was also recorded on account of rising petrol and diesel prices by 2.5 and 2.1 percent, respectively.

“Going forward, we expect the inflation rate to remain within the government set range of 2.5 – 7.5 percent. We, however, expect inflationary pressure to arise from increased fuel prices due to increased external uncertainties arising from the ongoing geopolitical events,” said Cytonn.

Risks are also present on food inflation due to the locust invasion, which could have a negative impact on agricultural output.

Read Also: Tomatoes Retailing Averagely at Ksh. 103 Per Kg Across the Country