Cost of living hits two-year high as inflation rises to 7.1% in May

Consumer prices have registered their biggest jump in more than two years since February 2020 as inflation in May hit a high of 7.1 per cent from 6.47 per cent in April.

New data from the Kenya National Bureau of Statistics (KNBS) attributes the hike in the consumer price indices (CPI) to costlier food and fuel in the period.

For instance, the food and non-alcoholic beverages index has soared by 1.4 per cent from April with most food essentials marking a jump in cost.

The cost of a two-kilogram packet of fortified maize flour has moved from a mean Ksh.138.10 in April to Ksh.147.57 in May.

The cost of one-litre salad cooking oil has meanwhile soared by 5.3 per cent in the same period to Ksh.370.71 from Ksh.351.91.

A 500-millilitre packet of fresh cow milk costs Ksh.57.30 in May from Ksh.55.27.

Moreover, a two-kilogram packet of wheat flour costs Ksh.165.89 from Ksh.160.70 last month.

Other food items to register price hikes in the period include bread and beef.

Greens including cabbages, spinach and sukumawiki were however spared from the price hike registering price declines of four, 4.1 and five per cent respectively in the period.

The cost of electricity was unchanged in May with the Energy and Petroleum Regulatory Authority (EPRA) holding down the price of adjustable power tariffs for the sixth straight month.

Nevertheless, energy and transport costs were on the rise following the lifting of the cost of all three fuel products by EPRA on May 14.

The cost of petrol for instance now average Ksh.150.94 per litre around the country while mean diesel and kerosene costs stand at Ksh.131.91 and Ksh.119.86 per litre respectively.

The rate of inflation now threatens to break the government's upper target of inflation at 7.5 per cent with both food and fuel costs expected to tread higher in the short-run.

In anticipation of the hot inflation print, the Central Bank of Kenya (CBK) raised its benchmark lending rate by 50 basis points to 7.5 per cent on Monday from seven percent with the view of combating high inflation.

“The Monetary Policy Committee (MPC) noted the elevated risks to the inflation outlook due to increased global commodity prices and supply chain disruptions and concluded that there was scope for tightening of the monetary policy in order to further anchor inflation expectations,” said CBK.

The rate hike which was the first in nearly seven years since July 2015 is expected to raise the interest rate on borrowing serving to temporarily hold demand-driven factors to consumer costs in the intermediating period.