Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

Kenya inflation hits 12.95 pc in May

NAIROBI, Kenya, May 31 – Kenya’s inflation figures continued climbing in May, adding 0.9 points to 12.95 percent from the 12.05 percent recorded in April.

Reports from the Kenya National Bureau of Statistics (KNBS) show that high fuel and food prices maintained pressure on the Consumer Price Indices (the measure used to determine the level of inflation) in May.

This marks the seventh consecutive time inflation has risen in the country from a low of 3.18 percent witnessed in October 2010. The figure is also higher than the Central Bank’s target of retaining inflation at five percent.

KNBS statistics showed that the consumer price index stood at 1.01 percent in May, which was lower than April’s 3.03 levels. The food and non-alcoholic drink index went up 1.27 percent.

The energy index went up 0.91 percent while transport costs went up 2.38 percent.

Rising fuel and food costs have been the major drivers of inflation as poor rains have persisted during the year.

Joshua Anene, a trader with Commercial Bank of Africa said the rise would pressure the Central Bank into hiking interest rates to stabilise the situation. Mr Anene however said that the CBK was likely to hold its key lending rate at current six percent.

“The current inflation is not demand driven but more of supply constraints. I expect the CBK to hold at six percent to gauge and assess the impact of their last hike,” Mr Anene said.

He said that further hikes of the CBR rate would lead to a situation where credit would then become more expensive for Kenyans.

Advertisement. Scroll to continue reading.

“If they hike it again then the next day banks will be advertising that the interest rates have gone up,” he said.

The CBK’s Monetary Policy Committee was to meet on Tuesday, where they will deliberate on the current situation and what actions to take.

On May 10, Standard Bank Head of African Research Stephen Bailey-Smith said that the Central Bank was under immense pressure to correct the rising cost of living in the country, adding that tightening monetary policy was inevitable. 

“After a few years of sustained, inflation seems to be quickly picking up. If the Central Bank does not step in then inflation could go as high as 18 percent this year,” Mr Bailey-Smith said.

Follow the author at https://twitter.com/MjKaranja

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...