Relief for households as drop in food costs eases inflation

Inflation dropped to 7.47 per cent last month on falling food prices, moving within the government's preferred range for the first time since February this year.

The rate rose above the government's preferred band of 2.5 to 7.5 per cent earlier in February after a regional drought caused food prices to surge.

It peaked at 11.7 per cent in May before dropping to 9.21 in June after rains boosted food supplies.

READ: Kenya's inflation rises to a five-year high of 11.7pc in May

The lower rate of inflation this month was attributed to a decrease of 2.05 per cent in the food and non-alcoholic drinks index compared with June, the Kenya National Bureau of Statistics (KNBS) said in a statement Monday.

"The drop was cause by significant falls in the prices of several food items arising out of good weather conditions in some parts of the country," the bureau said.

Central Bank of Kenya last month forecast the drop and the movement of the cost of living measure to within the Treasury’s range.

Food is main driver

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, making it the main driver of the cost of living, followed by utilities such as rent, water, electricity, gas and fuels at 18 per cent.

Vegetables, potatoes and maize flour - Kenya’s main staple - have in the past two months been falling.

A kilo of potatoes dropped 21.3 per cent to Sh56.75 over the past month while 2kg packet of flour dropped to Sh116.50 last month from Sh119.08 in May.

Falling prices of staple maize flour and other foods will offer relief to President Uhuru Kenyatta who has battled to lower the cost of living as he seeks a second term in August elections.

Opposition leader Raila Odinga has used the high cost of living to portray Kenyatta's government as incompetent.

READ: Maize and sugar drive inflation to 5-year high