Inflation up 6.31pc in March as cost of food rises

Money Markets

Stephen Mbithe sells tomatoes at Ngara Market. Inflation in March rose way above government target for the year, pushed by rising prices of key food items such as tomatoes and potatoes. PHOTO | FILE |   NATION MEDIA GROUP

By NEVILLE OTUKI, notuki@ke.nationmedia.com

In Summary

• Inflation has increased for two months in a row since February when it bucked a five-month declining trend, inching up marginally on rising prices of key food items.
• Inflation had been dropping since last August when it hit a 25–month high of 8.36 per cent but was cooled by the falling electricity and fuel prices.

Inflation last month rose way above government target for the year, pushed by rising prices of key food items such as tomatoes and potatoes.

Data from the Kenya National Bureau of Statistics (KNBS) show that it rose to 6.31 per cent in March from 5.61 per cent the previous month.

“The rise in prices was mainly as a result of the dry weather conditions experienced during the period,” KNBS said in a statement.

At 6.31 per cent, last month’s inflation is well above the Central Bank of Kenya’s (CBK) target of five per cent.

READ: Inflation edges up slightly in February to 5.61pc

Inflation has increased for two months in a row since February when it bucked a five-month declining trend, inching up marginally on rising prices of key food items.

A kilogramme of tomatoes last month went up by Sh11 to Sh99 compared to similar month last year while a kilo of potatoes rose by a shilling to Sh53.
The KNBS data, however, show that the price of milk, sugar and maize flour dropped in the period.

The increase in the cost of living comes at a time households have enjoyed the benefits of cheaper geothermal electricity after the injection of the 280 megawatts of steam energy last December.

Energy officials this month said they will not raise electricity costs, a key component in the country’s inflation basket, despite a prolonged dry spell that has affected water levels in hydropower dams.

ALSO READ: Cost of living eases slightly on cheaper power costs

The energy regulator mid-last month raised petroleum prices for the first time in six months, citing rebounding of crude oil prices but impact on inflation has been minimal.

Inflation had been dropping since last August when it hit a 25–month high of 8.36 per cent but was cooled by the falling electricity and fuel prices.
A rise in inflation rate means households are forced to shoulder higher commodity prices.