Kenya’s inflation rate drops for second consecutive month amid drop in electricity cost, others

Avatar
Two months ago, Kenya’s apex bank sought to tackle inflationary pressures and other challenges plaguing the country’s economy
Kenyan inflation

Kenya’s inflation rate dropped for the second time since June 2023 following a dip in the price of some essential items. The country’s inflation rate dropped from 7.9% to 7.3%, the lowest since May 2022. Also worth noting is that the rate fell within the Central Bank of Kenya’s (CBK) desired range for inflation (2.5% to 7.5%). 

The Consumer Price Indices also rose by 0.1%, taking the figure from 134.01 in June 2023 to 134.15 in July 2023. According to the apex bank’s official report, the inflation rate’s reduction was influenced by a drop in the cost of food items like potatoes, cowpeas, and cabbages. However, the price of onions rose by 11.4%. 

Similarly, the CBK noted a reduction in the cost of electricity, water, and gas by 1.2%. This was prompted by price reductions for gas/Liquified Petroleum Gas (LPG) and electricity. For context, the rate for 13 kilograms of gas was reduced by 9.2%. Electricity prices (200 kilowatts and 50 kilowatts) also dropped by 5.3% and 4.4% respectively. 

But then, kerosene cost more as the price shot up by 5%. The Transport Index saw no reduction, only an increase. The CBK stated that the transport index rose by 3.5% from June 2023 to July 2023. This was chiefly due to the hike in petrol and diesel prices. As such, citizens had to pay more to access public transport plying certain routes. 

Read also: Kamau Thugge and his herculean task of transforming the CBK into a world-class central bank

Does Kenya’s inflation rate mean CBK’s recent policies are bearing fruit?

Following the drop in Kenya’s inflation rate, it’s easy to argue that CBK’s newly-appointed governor, Kamua Thugge is making progress. Two months ago, the apex bank sought to tackle inflationary pressures, global crises, and other challenges plaguing the country’s economy by raising its lending rate from 9.50% to 10.50%. 

Kenya's inflation rate drops for second consecutive month amid drop in electricity cost, others
Kamau Thugge, Governor of Kenya’s Central Bank

Fast forward to August, and there’s already the sign of a positive change. But perhaps, it’s quite early to celebrate a possible economic turnaround. Although the prices of gas and electricity were reduced, Kenyans who rely heavily on kerosene had to pay more to use the fuel. 

The fact that public transport has become more expensive than before doesn’t sit well with most low-income Kenyans. A few weeks ago, many citizens participated in protests to voice their anger over the growing hardship. For clarity, Kenya recently passed a Finance Bill that introduces more taxes as part of a revenue generation scheme.

Elsewhere in Nigeria, the new government also rolled out a new wave of fiscal policies to jumpstart the Naira. However, it hasn’t worked out so far as fuel prices have shot up as a result.

The prices of household items like food have also been increased. Electricity now costs more. Although analysts claim the current hardship is necessary for the country’s economic recovery, each passing day seems to hurt more than the previous. 


Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!

Register for Technext Coinference 2023, the Largest blockchain and DeFi Gathering in Africa.

Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!