Inflation continues downward trend

February 29, 2012
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NAIROBI, Kenya, Feb 29 – Inflation continues to ease with the latest statistics from the Kenya National Bureau of Statistics (KNBS) showing that February rates declined by 1.62 percent to Sh16.69 percent.

This is the third consecutive month that the cost of living is slowing down.

The food and non alcoholic index fell by 0.3 percent between January and February as a drop in foodstuffs such as sugar, maize flour and rice offset an increase in products such as sukuma wiki, cabbages, potatoes, and milk.

“This slight decrease (0.3 percent) was net effect of both rises and falls in the prices of a number of food products,” KNBS said in a statement.

One kilogram of sugar for instance dropped on average by Sh25.60 to Sh119.74 while that of wheat flour fell by 6.22 percent. On the other hand, the prices of sukuma wiki, cabbages, potatoes, milk and rose by 12.48 percent, 11.75 percent, 4.56 percent and 2.87 percent respectively.

As a reflection of the marginal decline in fuel prices during the period under review, there was a commensurate drop in bus and taxi fares leading to the 0.91 percent slump in the transport index.

The housing, water, electricity, gas and other fuels index increased by 0.2 percent driven by a marginal rise in the fuel cost adjustment charge, which is the major component in the computation of an electricity bill.

The ease in inflation has also been supported by the continued strengthening of the shilling which has more or less stabilised at Sh82.50 against the dollar on the account of the tight monetary stance.

Although the balance of payment pressures and the uncertainties in the global financial markets due to the ongoing eurozone crisis continue to be the main risks to inflation outlook, the government remains optimistic that a single digit rate is feasible in a few months.

Projected to have peaked at 19.72 percent in November 2011, the government is hopeful that by mid this month, it will have managed to bring inflation within its targets of between seven and nine percent.

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