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Common Food Items Push Kenya’s Inflation Rate to a High of 8.8 Percent

BY Soko Directory Team · August 3, 2021 11:08 am

KEY POINTS

The 14-month high inflation rate is pushing households on the brink of financial suicide amidst the already high costs of energy.

Central Bank of Kenya’s (CBK) twelve-month inflation data has revealed that the high prices of common food items such as beef, bread, and cooking oil have pushed inflation to a high of 8.8 percent.

The 14-month high inflation rate is pushing households on the brink of financial suicide amidst the already high costs of energy.

According to CBK, the cost of cooking oil jumped the most in food item categories increasing by 32 percent between June 2020 and June 2021.

The price of beef, on the other hand, rose by 23.6 percent during the period under review while that of bread increased by 20.1 percent.

The sharp increase in the food items, especially the cooking oil and bread was attributed to elevated international costs for palm oil and wheat, respectively. This was also partly caused by supply chain constraints due to Covid restrictions in producing countries.

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Reduced numbers of livestock in slaughterhouses have been the main cause of higher beef prices.

“This is attributed to the increases in imported inputs, for instance, palm oil whose prices has gone up significantly, same case with wheat which has a huge import component,” said CBK Governor Patrick Njoroge.

“There are also domestic pressures to month-on-month inflation…affecting items such as sukuma wiki and beef, being pushed by seasonality.”

The past half a decade has seen palm oil prices remain largely stable. It recorded a sharp rise in the 12-months to June after Covid-19 lockdowns cut output from plantations in Southeast Asia.

Kenya mainly imports palm oil from Malaysia, whose benchmark palm oil price went up from about 70,480 shillings per metric ton in June 2020 to approximately 110,500shillings in June 2021.

The increased palm oil prices have also driven the cost of other alternatives such as animal and vegetable oils to go up, partly due to higher demand to fill in the gap caused by lower palm oil production.

Similarly affected are wheat imports whose supply constraints have seen millers raise the price of flour trickling down to bread prices. It is expected, however, that the local harvests during the year will moderate the prices in the short term.

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As a result of the higher food costs, Kenya’s overall inflation rose for the third straight month to hit 6.4 percent in July from 6.3 percent in June.

Fuel inflation, another major factor in the cost of living, fell for the fourth straight month to 11.8 percent, helping to mitigate the effect of higher food prices.

 

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