VAT raises inflation to 8.29 per cent

A man shops for milk and bread at a kiosk in Nairobi. Inflation rate surged to 8.29 per cent in September from 6.67 per cent in August. FILE 

Introduction of VAT pushed up Kenya's rate of inflation to 8.29 per cent in September from 6.67 per cent in August and marked the highest level in 15 months.

Data from the Kenya National Bureau of Statistics (KNBS) shows that food, electricity, transport, and housing recorded some of the highest price rallies since the introduction of VAT on more than 400 goods that were previously exempt.

“The implementation of the VAT Act and seasonal factors affecting supply of common food crops were the main causes of rise in the food index,” KNBS said in a statement.

The price of milk rose by the highest margin, with a 500ml packet of the commodity costing an average of Sh57.43 last month or 22.1 per cent higher compared to Sh47 in August.

The Kenya Revenue Authority introduced VAT –a consumption tax— on September 2 to simplify the tax code and raise Sh10 billion annually from the previously exempt items.