Higher food prices lift September inflation to 6.34pc

Money Markets

A fruit and vegetables trader. The cost of living rose marginally in September to 6.34 per cent driven by a rising cost of some food items. PHOTO | FILE  

By KIARIE NJOROGE, gkiarie@ke.nationmedia.com

The cost of living rose to 6.34 per cent in September from 6.26 per cent in August driven by increasing prices of some food items.

The Kenya National Bureau of Statistics (KNBS) data shows the cost of other key consumption items like fuel, housing and transport dipped or rose marginally.

“Between August and September 2016, the food and non-alcoholic drinks index increased by 0.55 per cent,” KNBS said in a statement.
“This was attributed to increase in prices of several food items which outweighed the decrease in others.”

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, making it the main driver of the cost of living.
Sugar was among the items that recorded a major price rise from an average Sh116.52 per kilogramme in August to Sh120.74 in September.
A kilogramme of Irish potatoes also rose from an average Sh73.93 in August to Sh77.46 last month.

Fresh fish

A kilogramme of fresh fish rose by nearly Sh10 from Sh405.20 to Sh414.52. The cost of power remained the same while key fuels- kerosene, diesel and petrol went down.

“The transport index decreased by 0.3 per cent in September 2016 compared to August 2016 mainly on account of decreases in the pump prices of petrol and diesel,” KNBS said.

At 6.34 per cent, September inflation falls within the Central Bank of Kenya’s (CBK) preferred range of between 2.5 per and 7.5 per cent.
The level of inflation, one of the key metrics used to determine the Central Bank Rate (CBR), is likely to be closely watched as it will influence the cost of lending.

Banks’ lending rates are capped at a maximum four per cent above the CBR.