New Year blues as inflation in Kenya hits 5.82 per cent in December

Nairobi,

Kenya’s economy grew 5.1 per cent in quarter three of 2019, a drop from 6.4 per cent in the same period in 2018.

The drop is likely to further put pressure on the economy at a time when Kenyans feel 2019 was a bad year.

The Kenya National Bureau of Statistics (KNBS) gave the report on Tuesday, saying the deceleration in growth was mainly on account of suppressed growth in most of the sectors of the economy.

The slowed overall performance, according to KNBS, was occasioned by relatively slower growths in activities of manufacturing (3.1 per cent), electricity and water supply (4.9 per cent), construction (6.6 per cent), wholesale and retail trade (4.7 per cent) and transportation and storage (7.1 per cent), relative to notable performances recorded in the same quarter of 2018.

INFLATION RISES

The KNBS also reported that inflation rose for the fourth consecutive month to close the year at 5.82 per cent in December, eating into the purchasing power of consumers. 

The rise was from 5.56 per cent recorded in November, 4.95per cent in October and 3.83 per cent in September, which was the lowest rate in 2019.

At 5.82 per cent, inflation is still within the government’s target of between 5 and 7.5 per cent, but the sharp rise in the last quarter points to tough times ahead. 

The KNBS attributes the rise in inflation, which measures the cost of living, to a rise in the prices of some food and non-alcoholic drinks.

Households are bracing for New Year blues as the prices of commonly purchased items shot up, significantly weakening their purchasing power.

Further, households, which generally spend more on food items and fares during the festive season, face additional expenses such as tuition fees at the start of January as schools open.

FOOD PRICES

The KNBS report shows the food and non-alcohol drinks index increased by 1.46 per cent at the height of December festivities.

“A high increase of vegetables was recorded despite the heavy rains. For instance, the price of kale, popularly known as sukuma wiki, tomatoes, spinach and onions increased by 5.6 per cent, 7.8 per cent, 9.1 per cent and 5.1 per cent respectively compared with prices for the previous month,” it states.

Already, the price of milled maize flour has hit unprecedented levels with a 2kg packet, overtaking wheat to retail at Sh135.

This price increased in December by 0.77 per cent on the month–on-month inflation and by 52.26 per cent, compared to same period in 2018.

OTHER PRICES

The prices of other items such as beans, beef and sugar increased by 1.51 per cent, 1.11 per cent and 4.12 per cent respectively.

The KNBS says a kilogramme of beans is now retailing at Ksh124.95 ($1.24) compared to Ksh123 ($1.23) in November and Ksh107.6 ($1.07) in December 2018.

However, during the same period, prices of unpacketed fresh milk and mangoes dropped by 0.67 per cent and 3.44 per cent respectively.

A litre of fresh unpacked milk now costs Ksh64.16, a small drop from Ksh64.59 in November but more expensive than the Ksh60.69 ($0.60) at a similar period in 2018.

PETROL, ELECTIRICY

According to the KNBS, the government clampdown on charcoal trade wiped out savings from downward review of petroleum prices by the energy regulator as the housing, water electricity, gas and other fuel index increased marginally between November and December.

“Despite a decrease in pump prices of diesel and petrol during the month, the transport index increased by 2.1 per cent mainly as a result of increase in transport fares,” it said.

However, consumers had a reprieve in the cost of electricity following declines of 3.25 per cent and 2.26 per cent per 50 kWh and 200 kWh respectively from November.