Basics remain expensive despite welcome tax relief


Food remains expensive

Inflation rises to its highest since May 2012 as prices rise week by week

Kenyans have been forced to tighten their belts as the prices of basic goods, particularly food and fuel, continue to soar, new data from the Kenya National Bureau of Statistics shows.

Hard times bite as the cost of food, fuels, water and rent escalate, putting a strain on the budgets of the poor and middle class families.

The overall inflation rate in March stood at 10.3 per cent year-on-year — the highest in the last four years and 10 months, when it stood at 12.2 per cent. The Central Bank of Kenya prefers that inflation remain between a minimum of 2.5 per cent and a maximum of 7.5 per cent.

Inflation is the rate at which the prices of goods and services rise over time, resulting in money losing value. That means that with rising inflation, Kenyans spent more money to buy fewer goods in March compared to February.

With the food and non-alcoholic drinks index increasing by almost 19 per cent in March this year compared to March last year, Kenyans will continue to struggle to put food on their plate despite the tax waivers on maize grain and flour announced in this year’s Budget.

The cost of maize flour, maize grain, rice, potatoes, spinach, cabbages, milk, kerosene and diesel have risen all sharply, driving up the cost of living, a review of inflation data by Nation Newsplex shows.

In March last year, a two-kilogram- packet of sifted maize flour sold for an average price of Sh104. Last month, the same packet cost Sh132, a 28 per cent spike. The cost of a kilo of maize grain also rose by a quarter, from Sh41 to Sh52.

Kenyans spend the lion’s share of their income on food and drinks. For every Sh100 that a Kenyan spends, Sh45 goes to food and drink.

In an attempt to bring down the cost of food, Treasury Cabinet Secretary Henry Rotich waived import taxes on maize and removed VAT taxes on bread and maize flour.  

The move is expected to reduce the prices of these staples by 16 per cent if retailers pass on the tax break to consumers.

He also raised the lowest taxable income to Sh13,486 from Sh11,135 a measure that is expected to cushion lowest-income earners.

But as drought worsens, and given that this is an election year, Treasury’s welcome move is unlikely to significantly bring down the cost of living.

Earlier analysis by Newsplex shows that the economy has been more likely toslow downto a near standstill during multiparty election years than to grow or slow down slightly.

The price of Irish potatoes rose even more steeply. Last month, a kilo of potatoes cost an average of Sh98.42, representing an increase by a third from Sh74 in March last year. During the same period, the price of a kilo of spinach increased by 27 percent from Sh46 to Sh59.

Over the same period the cost of a kilo of sugar rose by 18 per cent from Sh113 to Sh133

The cost of a kilo of grade 2 rice also jumped 13 per cent from Sh101 to Sh114. The price of Grade 1 rice also went up by eight per cent to Sh194 from Sh180.

The price of a half-litre packet of fresh milk increased by six per cent from Sh53 to Sh57, while a litre of unpacketed fresh milk sold for Sh59, up eight per cent from Sh54.

Of the selected basket of goods, the increase in the average price of coriander (dania) was steepest. One hundred grams of dania increased 60 per cent, from Sh69 to Sh110.

Persistent drought in various parts of the country has contributed to the rise in food prices. Still, despite Treasury’s efforts to bring down the cost of some food items such as maize meal, wheat and bread, the high cost of living means that most middle and lower class Kenyans have to do without basic foods and other necessities to make ends meet.

Earlier analysis by Newsplex found that Kenyans spend the lion’s share of their income on food and drinks. For every Sh100 that a Kenyan spends, Sh45 goes to food and drink.

COOKING AND LIGHTING

The steep rise in the cost of fuel has also contributed to the tough times. The price of kerosene, the fuel used for cooking and lighting in low-income households rose by more than 22 per cent from Sh57 in March 2016 to Sh69 last month.

Diesel rose by 18 per cent from Sh77 to Sh91 and petrol by 13 per cent from Sh90 to Sh102 over the same period. The increase contributed to the rise in the cost of transport.

Electricity (50 Kwh) increased by 15 per cent from Sh494 in March 2016 to Sh570 last month.

Rent for a three bedroom maisonette increased by three per cent from Sh32,798 to Sh33,904. Rent for a single room also went up by the same margin, from Sh3,980 to Sh4,100

The price of 3kg of Liquified Petroleum Gas (LPG) gas fell by 12 per cent over the same period from Sh2,277 to 1,999. However, the amount was still higher than the price in February when it retailed at Sh1,976.

A spot check by the Daily Nation around Nairobi’s Central Business District revealed that different basic good retail at different prices depending on the brand and the prices keep changing from week to week. 

A two-packet kilo of maize flour sold at between Sh142 and Sh187, depending on brand and the supermarket from which one buys.

“The price of the same amount of maize flour has increased from below Sh110 for the cheaper brands and Sh127 in January,” said Patrick Mwendwa a supermarket attendant at one of the major retail stores in the CBD on Thursday.

“In January, Hostess, the priciest brand we stock, was selling at Sh127 now we’re selling it at Sh172. The other brands were sold at between Sh108 and Sh110, now Jogoo is at Sh143, Pembe Sh144 and Ndovu Sh146,” he added.

According to Mwendwa a kilo of sugar too had gone up by about Sh25 from Sh110 at the end of last year to Sh145, milk had gone up by at least Sh4 from Sh44 to Sh48, bathing soap by Sh10 and rice by Sh35 from Sh75 to Sh110 per kilo of local rice.

“I am a consumer too, so watching these increases in price have been nerve-racking,” he said.

LESS LEAVES IN A BUNCH

Pamela Achieng, a 36-year-old stay-at-home mother of two children in Kibera Estate says inflation has forced her household to accept more and more sacrifices, compromises and budget-juggling.

“I do not buy my maize flour from the shop because I cannot afford it. I get my unga from the local maize miller in the estate. But the 2-kilogram tin of maize that we bought at Sh100 in January is now selling at Sh125, and this just shot from Sh120 in February.”

Sukuma wiki too, may not have been increased in price, but it has reduced in quantity and for the same amount of money you get much less leaves in a bunch,” she says and is quick to add, “Things were already bad but we feel life is becoming harder.

Balancing expenses has become much more difficult because it is not every day that I get work.”

What she used to buy for Sh1,000, now costs her and her husband, a construction site labourer who earns Sh1,500 for a day’s work, about Sh600 more.

“It has become hard to plan for money,” she says. “Every other day you go the shop and something is at a much higher cost than it was previously”. 

In trying to stretch every shilling, she says, “We have had to cut back on some of the things that are not really an essential, like sugar and sometimes we do without milk and things like tomatoes in our vegetables to make ends meet. Eating healthy is becoming much more difficult.”