Inflation drops to 7.47pc on lower food costs

Inflation drops to 7.47pc on lower food costs
Imelda Akinyi, 25, arranges fruits at her stall in the trading centre of Kogelo, west of Kenya's capital Nairobi, July 14, 2015. REUTERS/Thomas Mukoya

The country’s rate of inflation has for the third month running dropped to hit 7.47 percent in July.

This was down from 9.21 percent recorded in June, with the Kenya National Bureau of Statistics (KNBS) attributing it to lower food prices during the month.

The rate of inflation has now come within the government target of between 2.5 percent and 7.5 percent, after a high of 11.7 percent in May.

According to data from KNBS, the low rate of inflation was as a result of a 2.05 percent in the food and non-alcoholic drinks index compare with June.

“The drop was cause by significant falls in the prices of several food items arising out of good weather conditions in some parts of the country,” KNBS Director General Zachary Mwangi said in a statement.

Inflation had been on the rise as a result of drought experienced from the tail end of 2016 that led to food shortage across the country.

This saw the Central Bank of Kenya adopt a wait and see approach with the rising inflation and whether food prices would stabilize after the rains.

The CBK’s monetary policy committee has held the central bank rate steady since late 2016, but had predicted a drop in inflation in the third quarter of the year.

Food is seen as the main driver of the cost of living as it constitutes 36 percent of the basket of goods used to calculate inflation.

During the month of July, a two kilogram packet of flour dropped to Sh116.50 while a kilo of onions was sold at Sh128.

The government was forced to subsidize the cost of maize flour as well as introduce incentives for bread and milk processors as a means to deal with the high cost of living.

Heading into the elections, the cost of living has become a major issue for the government and opposition parties.

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