Kenya's Inflation Eases to 5% in April 2024, Hitting CBK Target Mid-Point

Kenya's inflation falls to 5% in April 2024, hitting the Central Bank of Kenya's (CBK) target mid-point, despite price increases in transport, electricity, cooking gas, fuel, and some food items.

The Kenya National Bureau of Statistics (KNBS) reported a 0.7% drop in inflation from 5.7% in March 2024.

The overall year-on-year inflation rate as measured by the Consumer Price Index (CPI) was 5.0% in April 2024, down from 5.7% in the previous month. The increase in annual inflation was attributed to the rise in prices of commodities, with the transport index increasing by 9.2% and electricity, cooking gas, and fuel prices increasing by 3.8%. However, prices continue to decrease for wheat flour, maize flour, and electricity slightly during the same period.

The decrease in the cost of electricity, transport, and some food items like sugar, maize flour, and cooking oil contributed to the reduction in the cost of living compared to March. The Consumer Price Index (CPI) showed that electricity, housing, water, gas, and other fuels had the highest change at 1.3%, while food and non-alcoholic beverages decreased by 0.1% and transport fell by 0.3%.

Food and non-alcoholic beverages carry the most weight in the basket of goods and services used to calculate inflation at 32.9%, followed by electricity, housing, water, gas, and other fuels at 14.6%.

The housing, water, electricity, gas, and other fuels index decreased by 1.3% between March and April 2024, mainly due to a 9.7% decline in the price of kerosene. The prices of petrol and diesel also reduced during the period, leading to a decrease in the transport index.

Why this matters: The easing of Kenya's inflation rate to the CBK's target mid-point is a positive development for the country's economy. It indicates that the government's efforts to control inflation rates are yielding results, despite the challenges posed by rising prices of essential commodities. The lower inflation rate will provide relief to consumers and businesses, who have been struggling with the high cost of living.

Local sugar millers in Kenya produced 63,075 tonnes of sugar in February 2024, the highest number since they resumed operations in December 2023, but sugar prices still increased by 9.2%. The heavy rains affecting major transport corridors may lead to increased commodity prices in the next month. Despite the easing, the inflation rate remains high compared to the same period in 2023.

Key Takeaways

• Kenya's inflation falls to 5% in April 2024, hitting CBK's target mid-point.
• Prices decrease for wheat flour, maize flour, and electricity, but increase for transport, fuel, and some food items.
• The housing, water, electricity, gas, and other fuels index decreased by 1.3% due to a 9.7% decline in kerosene prices.
• The easing of inflation is a positive development, providing relief to consumers and businesses.
• Despite the easing, inflation remains high compared to the same period in 2023.