Kenya's Q1 Average Inflation Hits 6.1% From 4.4%

Kenya’s Q1 Average Inflation Hits 6.1% From 4.4%

By Soko Directory Team / Published April 6, 2020 | 8:00 am

Kenya’s average inflation rate rose to 6.1 percent in Q1’2020 as compared to 4.4 percent in a similar period in 2019 according to stats put together by Cytonn Investments.

During the month of March, the Kenya National Bureau of Statistics (KNBS), revised the commodity basket and included several items such as mobile phone airtime, pay-tv, and garbage collection while dropping several archaic items such as radio and video cassettes.

The revision was in a bid to reflect the true cost of living due to increased urbanization and the expanding middle-class population.

The revision brings the number of items included in the commodity basket to 330, from 234 items previously, while data collection zones have increased from the previous 25 to 50.

The KNBS also adjusted the weighting assigned to items in the commodity basket such as the Food and Non-Alcoholic Beverages, Alcoholic Beverages, Tobacco and Narcotics, and Transport Indices, which previously had a weighting of 36.0, 2.1, and 8.7 percent to 32.9, 3.3, and 9.7 percent respectively.

Inflation for the month of March came in at 6.1 percent with the m/m inflation increased marginally by 0.2 percent. The increase in the month-on-month inflation in March was mainly due to:

A 0.6 percent increase in the food and non-alcoholic beverage index, driven by increases in prices of some food items such as Mangoes, Irish Potatoes, onions and cooking oils which increased by 5.4, 2.3, 2.1, and 0.8 percent respectively.
A 0.1 percent decrease in transport cost driven by a 1.3 percent decline in pump prices for petrol
A marginal decline (0.02 percent) in Housing, Water, Electricity, Gas and Other Fuels Index stimulated by a 2.2 percent decrease in prices of cooking fuels which offset the 0.9 percent increase in house rent.

In this quarter, liquidity levels remained stable and well distributed in the market as indicated by the 23.9 percent decline in the average volumes traded in the interbank market to 11.9 billion shillings from 15.6 billion shillings recorded in Q4’2019, There was a subsequent decline in the interbank rate to 4.4 percent from 5.7 percent the previous quarter indicating increased liquidity in the market attributable to support by government payments and debt maturities.

During the week, liquidity tightened with the average interbank rate rising to 5.2 percent from 4.7 percent recorded the previous week attributable to tax payments which offset government payments.

There was a decrease in the average volumes traded in the interbank market by 55.9 percent to 7.6 billion shillings from 17.3 billion shillings the previous week.

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