Rising food, commodity prices push December inflation to 8.01pc

The food and non-alcoholic drinks’ index rose by 1.23 per cent following a rise in excise duty imposed on beer, juices and water. PHOTO | FILE  

By NEVILLE OTUKI, notuki@ke.nationmedia.com

In Summary

• The cost of living measure has shot past Central Bank of Kenya’s preferred ceiling of 7.5 per cent.
• Treasury enforced the Excise Duty Act in December 1, allowing KRA to charge more levies on bottled water, cigarettes, beer and juice.

Kenya’s inflation hit a 16-month high in December, above the government’ preferred ceiling, on rising prices of key food items, transport and commodities lifted by a new excise duty.

Official data shows that inflation rose to 8.01 per cent from 7.32 per cent in November – marking the highest rate since August last year when it stood at 8.36 per cent.

The cost of living measure has shot past Central Bank of Kenya’s preferred ceiling of 7.5 per cent.

The food and non-alcoholic drinks’ index rose by 1.23 per cent in December, the Kenya National Bureau of Statistics (KNBS) says.

“This aggregate increase in the food index generally resulted from increases in prices of several food items which outweighed the decreases,” the statistics body said in a statement.

“Similarly, as a result of increase in excise duty, prices of beer and cigarettes increased significantly. Consequently, the alcoholic beverages, tobacco and narcotics index recorded an increase of 11.46 per cent compared to the previous month.”

Treasury enforced the Excise Duty Act on December 1, allowing the taxman to charge more levies on bottled water, cigarettes, beer and juice.

READ: Water, beer, car prices up as new taxes take effect

The KNBS says that housing, water, electricity, gas and other fuels’ index increased by 0.55 per cent.

“This was mainly due to cost increases in house rents, charcoal and water services in December compared to November.”

READ: Two-bedroom house tenants feel 7.5pc rent rise pinch

The review period recorded drops in the cost of electricity, fuel and cooking gas, offering homes a reprieve.

“Although the cost of petrol and diesel declined, the transport index increased by 1.48 per cent in December compared to the previous month mainly due to increased bus and matatu fares,” says KNBS.