NAIROBI, Kenya, Jul 31 – Inflation has dropped to governments’ targeted 7.47 percent in July from last months’ 9. 21 percent just seven days to the General Election.
This was attributed to the significant drop in food prices in the period under review owing to good weather conditions in some parts of the country.
Food and non-alcoholic index dropped by 2.05 percent between June and July 2017 while year on year food inflation dropped to 12 percent.
The transport index also dropped by 0.29 percent due to a decrease in pump prices of petrol and diesel.
Housing, Water, Electricity and Gas index also decreased by 0.08 percent due to a decline in the cost of electricity, Kerosene and cooking gas.
Going forward to the end of 2017, analysts at Cytonn Investments expect inflationary pressures to be subdued given food prices are expected to continue to decline because of the rainfall witnessed during the long rains period, although depressed, and low global oil prices due to rising US oil production, which has suppressed the global recovery of oil prices, countering OPEC’s decision to extend the deal to cut down on oil production.
“We expect inflationary pressures to ease in the second half of 2017, but average 9.5 percent over the course of the year, which is above the upper bound of the government target range of 2.5 percent – 7.5 percent,” Cytonn Investments said.