January Inflation To Oscillate Between 5.6% And 6.0%

By Soko Directory Team / Published January 31, 2022 | 9:52 am

KEY POINTS

The government is 8.5 percent ahead of its prorated borrowing target of 392.6 billion shillings having borrowed 426.1 billion shillings of the 658.5 billion shillings borrowing target for the FY’2021/2022.

KEY TAKEAWAYS

Fuel prices for the period 15th January 2022 to 14th February 2022 remained unchanged at 129.7 shillings per liter for Super Petrol, 110.6 shillings per liter for Diesel, and 103.5 per liter for Kerosene

“We are projecting the y/y inflation rate for January 2022 to fall within the range of 5.6 – 6.0,” said Cytonn Investments in their latest report.

According to Cytonn, the key drivers that will shape the inflation for the month are:

With fuel being a major contributor to Kenya’s headline inflation, maintaining constant fuel prices is expected to have a muted impact on the inflation basket.

Food prices have remained relatively stable during the month attributable to improvement in agricultural output due to the ongoing rains in some parts of the country.

The foreign exchange fluctuation tariff for electricity usage remained relatively unchanged at 73.1 cents per Kilowatt hour (KWh) in December, from 73.0 cents per Kilowatt hour (KWh) in November 2021.

However, the fuel cost charge on electricity bills increased by 10.0% to Kshs 4.6 per Kilowatt hour (KWh) in December, from 4.2 per Kilowatt hour (KWh) in November.

Notably, in January 2022, the cost of power declined by 15.0 percent representing the first part of a 30.0 percent reduction to power cost promised by the government to take effect by the end of March 2022.

“Going forward, we expect the inflation rate to remain within the government’s set range of 2.5 – 7.5 percent. However, concerns remain high on the widening trade deficit as global fuel prices continue to rise due to supply bottlenecks,” said Cytonn Investments.

At the same time, rates in the fixed income market have remained relatively stable due to the high liquidity in the money market.

“We expect a gradual economic recovery as evidenced by the revenue collections of 926.3 billion shillings in revenues during the first six months of the current fiscal year, which is equivalent to 104.3 percent of the prorated revenue collection target,” said Cytonn.

About Soko Directory Team

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