One of the isles at Nakumatt Mega Supermarket along Nairobi's Uhuru
Highway. The cost of living rose to a five-month high to hit 7.30 per
cent in May on significant increases in the price of electricity and
food items. PHOTO/FILE
NATION MEDIA GROUP
The cost of living rose to a five-month
high to hit 7.30 per cent in May on significant increases in the price
of electricity and food items.
Experts
have warned that the rise, the second in a row, could see an increase
in benchmark interest rate, tightening credit to the economy.
Latest
data from the Kenya Bureau of Statistics indicates that the cost of
electricity, which rose by 20.5 per cent to 722 cents per kilowatt (KWh)
in May from 599 cents per KWh in April, pushed up overall rate of
inflation in May compared 6.41 per cent in April.
SIGNIFICANT RISES
“Once
again, unseasonably dry weather in Kenya and the country’s continued
reliance on rain-fed agriculture, are helping to pressure prices,” said
Razia Khan, Standard Chartered Bank’s regional head of research for
Africa.
There were also significant
rises in prices of several food items, including maize flour, potatoes
and sukuma wiki, pushing up the cost of living further.
“These
price increases outweighed falls in the prices of sugar, milk and a few
other items thereby resulting in an aggregate rise in the food index,”
KNBS acting director general Zachary Mwangi said in an e-mailed note.
Due
to higher costs of cooking oils in the period, housing, water,
electricity, gas and other fuels, the energy index increased by 1.76 per
cent.
However, with indicators
pointing to robust underlying momentum in the economy, and strong credit
growth (notwithstanding recent security risks), the likelihood of
food-related pressures spilling over into secondary effects is high.
Ms
Khan said rising inflation, narrowing the interest rate spread coupled
with nervousness around weakening of the shilling against the dollar,
should see Central Bank resume a modest rate tightening cycle from July.
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