Inflation tipped to rise on food, transport costs

A vegetable vendor in a Nairobi Estate. Upward inflationary pressure is expected to persist into this year despite the rains in the last quarter of 2019 on the back of persistently higher food prices and transport costs analysts have said. FILE PHOTO | NMG 

By CHARLES MWANIKI
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Summary

• Upward inflationary pressure is expected to persist into this year despite the rains in the last quarter of 2019 on the back of persistently higher food prices and transport costs analysts have said.
• Economists at NCBA said demand side pressure on inflation will also become more pronounced as credit access opens up following the repeal of the rate cap law.
• Kenya’s inflation rose for a third straight month in December, hitting 5.82 percent from 5.56 percent in November and 4.95 percent in October.

Upward inflationary pressure is expected to persist into this year despite the rains in the last quarter of 2019 on the back of persistently higher food prices and transport costs analysts have said.

Economists at NCBA said demand side pressure on inflation will also become more pronounced as credit access opens up following the repeal of the rate cap law.

Kenya’s inflation rose for a third straight month in December, hitting 5.82 percent from 5.56 percent in November and 4.95 percent in October.

“Poor yield, inadequate food reserves and higher post-harvest losses may underpin food supply constraints while higher global oil prices will keep transport costs elevated.

“Moreover, demand pressures may begin to pick up with recovery in private sector lending following the rate cap repeal,” said NCBA analysts yesterday in a note on inflation.

Food prices have gone up despite the rains, largely due to difficulties in getting produce to the market as a result of transport disruption and post-harvest losses especially in vegetables and cereal.