Inflation hits 5.62pc as Uhuru tax reliefs fail to ease burden on families

Spikes in foodstuff prices and commuter fares have reversed gains from recent tax cuts and falling oil prices, pushing up the April inflation rate to 5.62 percent. FILE PHOTO | NMG 

By JOHN MUTUA
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Summary

• Spikes in foodstuff prices and commuter fares have reversed gains from recent tax cuts and falling oil prices, pushing up the April inflation rate to 5.62 percent.
• Data compiled by the Kenya National Bureau of Statistics (KNBS) show that Kenyans are paying more for consumer goods despite the reduction of the value-added tax (VAT) rate from 16 to 14 percent effective April 1.
• The data shows that food that accounts for 32.9 percent of the basket used by KNBS to determine inflation rose by between 17 and 24 percent in the period under

Spikes in foodstuff prices and commuter fares have reversed gains from recent tax cuts and falling oil prices, pushing up the April inflation rate to 5.62 percent. This represents a marginal increase from the revised March inflation figure of 5.51 percent.

Data compiled by the Kenya National Bureau of Statistics (KNBS) show that Kenyans are paying more for consumer goods despite the reduction of the value-added tax (VAT) rate from 16 to 14 percent effective April 1.

The data shows that food that accounts for 32.9 percent of the basket used by KNBS to determine inflation rose by between 17 and 24 percent in the period under review.

The VAT cuts do not apply to unprocessed foods, which most Kenyans consume.

One kilogramme of maize flour sold at Sh53.73 last month, an increase of 17 percent from April last year while a kilogramme of onions sold at Sh118.20, a rise of 24 percent from a similar period last year.

Residents in Nairobi and satellite towns paid more for transport after bus fares rose to an average of Sh50 from Sh30 in April last year reflecting the highest rise at 66.67 percent, despite the cost fall in fuel prices due to depressed demand in the wake of coronavirus.

The Treasury last month cut VAT rate by two percent to lower the cost of basic commodities and cushion Kenyans from the economic meltdown occasioned by coronavirus outbreak but this did not ease the cost of living after KNBS reviewed goods used to measure inflation.

“The increase was mainly attributed to the increase in prices of some food items like loose maize grain, Sukuma Wiki, onions, Irish potatoes and carrots,” said the KNBS Thursday.

The State agency in March reviewed the goods used to measure the cost of living a move that saw the inflation rate for the month fall to 5.51 percent down from 6.06 percent.

In February, the inflation rate stood at 6.80 percent.

The State agency dropped archaic goods like radio and video cassettes and included contemporary items like pay-TV subscription, mobile money transfer fees and garbage collection charges under the new measures.

In March, petrol prices dropped by the biggest margin since 2010 after crude oil prices crashed to an 18-year low on the coronavirus pandemic in what was expected to ease the cost of transport.

The price of super petrol fell to Sh92.87 per litre from Sh110.87, representing a Sh18 drop while diesel dropped Sh4.09 to Sh97.56 but this did not ease bus fares for city residents.