Falling food-prices cool inflation to 5-month low


Falling food-prices cool inflation to 5-month low
File image of packets of maize flour at a supermarket. PHOTO| COURTESY

In Summary

  • The easing of pressure on the consumers’ purchasing power is largely attributable to easing food prices during the month as the pricing of key agricultural commodities including maize fell by a considerable margin.
  • Falling fuel prices created a knock-on effect of dragging down spending pressure in a composition which sees the pairing of food and fuel contribute to nearly three-quarters of the entire CPI.
  • The falling rate will serve to quell pressure on the government’s fiscal policy as consumer prices effectively show the resilience to hold within the Treasury’s prescribed inflation band of 2.5 to 7.5 percent.

The inflation rate fell to a five-month low five percent in August, the monthly consumer price-survey by the Kenya National Bureau of Statistics (KNBS) shows.

The easing of pressure on the consumers’ purchasing power is largely attributable to easing food prices during the month as the pricing of key agricultural commodities including maize fell by a considerable margin.

“Sukumawiki, potatoes, cabbages, carrots, tomatoes and maize grain (loose) prices decreased by 8, 7.8, 6.8, 6, 4.9 and 2.8 percent respectively” read part of KNBSs’ August consumer price index (CPI) update.

‘The decrease in prices of these commodities outweighed observed increases in the cost of other food stuffs, thereby causing a decrease in the food index”.

The retracting inflation rate received further boost from falling fuel prices which created a knock-on effect of dragging down spending pressure in a composition which sees the pairing of food and fuel contribute to nearly three-quarters of the entire CPI.

Petroleum prices during the month registered a general decline in a substantive cut to petrol and diesel prices per liter by Ksh.2.86 and Ksh.3.28 respectively to the relief of motorists.

At the same-time the Forex exchange has held gains for inflation avoiding a further deterioration of consumer-spending from the impact of the non-food, non-fuel component with the shilling’s valuation against the US dollar ending its rot in August having closed at a five year low Ksh.104 at the end of July.

August inflation which comes on the back of the rate’s surge to a three month high 6.3 percent in July will serve to quell pressure on the government’s fiscal policy as consumer prices effectively show the resilience to hold within the Treasury’s prescribed inflation band of 2.5 to 7.5 percent.

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Story By Kepha Muiruri
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