Kenya’s inflation rate hits 19.7 pc

The cost of living shot up for the 13th consecutive month to 19.72 per cent in November, despite interventions by the Central Bank and the Treasury to contain it.

This means that Kenyans will continue to pay high prices for goods dashing hope of decline in prices in light of increased food supply.

Latest figures from the Kenya Bureau of Statistics (KNBS) shows the government measure of change in commodity prices went up by 1.5 per cent with food and fuel price increases remaining the biggest threat.

Last month, the overall inflation rate stood at 18.91 per cent.

“Maybe what the Central Bank is doing with the interest rates is not enough.

“There is need to look into other factors including encouraging competition in some sectors dealing with essential commodities such as the oil industry,” said Joseph Kieyah, a senior policy analyst with Kenya Institute for Public Policy Research and Analysis (Kippra).

Weak shilling

Early in the month, Central Bank of Kenya through the Monetary Policy Committee moved to contain inflation and stem the weakening of the shilling by increasing its indicative lending rate to 16.5 per cent up from 7.5 per cent in August.

The rate increase has triggered an adjustment of borrowing rates by commercial banks to an average of 24 per cent.

This means consumers are face by a double tragedy of paying high prices for goods and high interest on loans.

CBK seems to have only managed to aid the shilling with the local unit gaining to trade at 89.75/95 against the dollar on Tuesday, stronger than Monday’s close of 90.40/60.

The shilling was at the time of review trading at levels of 103/4 against the dollar.

The advisory committee is scheduled to meet tomorrow and will find itself faced with the challenge of inflation once more given that it is taking place just two days after the release of the current statistics on inflation.

Analysts expect the upward trend to persist largely on fuel prices.

“Fuel is a key underlying factor in the pricing of products. Although inflation resulting from food components is expected to be on a downward trend following the rains, this may be overshadowed by fuel based inflation,” said Gerishon Ikiara, a senior lecturer at the Institute of Diplomacy and International Studies at the University of Nairobi.

KNBS cites prices of food, utilities such as housing, water and gas as well as the cost of transport that have been on the rise during the last month as having had the greatest impact on the rate of inflation.

During the period under review, the price of food and non-alcoholic drinks went up by 1.35 per cent while the cost of transport increased by 2.19 per cent due to rising prices of petrol and diesel.

Between October and November, the cost of housing, water, electricity and gas went up by 1.55 per cent.