Cost of living remains at 5-year high as July inflation shoots to 8.3%

The cost of living in the country has remained at a five-year high as the rate of inflation in July climbs to 8.3 per cent from 7.8 per cent on rising food costs.

New data from the Kenya National Bureau of Statistics (KNBS) Consumer Price Index shows food prices swelled by 15.3 per cent year over year in the month and by 1.1 per cent from June.

Food commodities registering notable price increases in the month included carrots, maize, rice, beans, sukuma wiki and cabbages.

The rising cost of the commodities offset a slight cool-down in the pricing of items such as oranges, potatoes and onions from June.

The larger inflation print in July is despite a hold in the cost of fuel for the month through the retention of the fuel subsidy and falling LPG prices from the lowering of the VAT rate from 16 to eight per cent.

The cost of refilling a 13 kilogram LPG cylinder for instance fell by 16.7 per cent to an average Ksh.3,101 in July from Ksh.3,218 in June.

Year over year however, LPG prices remain higher by 29.5 per cent.

Government authorities nevertheless deem July’s inflation print as the peak as they anticipate lower consumer prices from the recently introduced unga subsidy and a steady decline in global commodity prices.

For instance, the Central Bank of Kenya (CBK) held off further monetary policy tightening on Wednesday as it left its benchmark interest rate unchanged at 7.5 per cent on improved inflation expectations.

“The recent waiver of import duties and levies on white maize, the subsidy on retail prices of sifted maize flour, and the recent reduction in VAT on LPG will further moderate commodity prices,” the CBK said in a statement on Wednesday.

At 8.3 per cent, July’s inflation print is the largest since June 2017 (9.21%).

The rate of inflation in the country hasn’t breached eight per cent since August of 2017.

Besides the expectation of falling global prices which could cut domestic wheat flour and cooking oil prices, the government is betting on a bumper harvest to further ease food prices in the country.