Falling fuel, power prices cut inflation to 15-month low

Politics and policy

Drop in food prices have contributed to inflation easing to 15-month low. PHOTO | FILE 

By KIARIE NJOROGE

Inflation last month eased to a 15-month low, helped by falling food, electricity and fuel prices.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the cost of living measure stood at 6.09 per cent, down from 6.43 per cent last month.

This is the third month in a row that inflation has dropped since it hit a 25–month high of 8.36 per cent in August.

“The decline in food inflation resulted from observed falls in the prices of several food commodities which outweighed notable rises in the prices of others,” said KNBS in a statement, adding that electricity and transport expenses also dropped.

The price drop of food, fuel and electricity, which have significant weight on household budgets, looks set to embolden policy makers’ resolve to keep inflation within the government’s preferred target of between 3.5 and 7.5 per cent.

Electricity prices have since September dropped by between 18.7 per cent and 27.4 per cent following the injection of 210 megawatts of geothermal power into the national grid, with 140 megawatts added in late July and 70 megawatts in September.

The price of petroleum products last month dropped to their lowest level since August 2012.

Fuel prices have a significant impact on inflation in the economy that depends heavily on diesel for transport, power generation and agriculture, while kerosene is used in many households for lighting and cooking.

Retailers continued to cut the price of the two-kilogramme packet of flour with KNBS quoting an average price of Sh107 last month down from Sh110 in October and Sh119.83 in May on increased supply of maize following harvest in the Rift Valley.

The cost of a 90-kilogramme bag of maize has dropped to Sh1,300 from Sh3,200 in May, offering millers room to lower flour prices.