Kenya's Inflation Drops To 7.3% After CBK Hiked Interest Rate To 10.5 Percent

• The Kenya National Bureau of Statistics (KNBS) reported a significant drop in the inflation rate from 7.8% reported in June 2023 to 7.3% in July 2023
• KNBS attributed the rising inflation for the past 12 months to the continued increase in food and fuel prices
• The drop in July 2023 inflation resulted from a reduction in prices of most food items like vegetables

Kenyans continue to feel some relief as food prices stabilise, the Kenya National Bureau of Statistics (KNBS) has revealed.

KNBS data showed a significant drop of 0.5% in inflation to 7.3% for the month of July 2023, compared to 7.9% reported in June 2023.

KNBS attributed the rise in inflation for the past 12 months, from July 2022 to July 2023, to the rising food and fuel prices.

"The inflation was largely due to an increase in prices of commodities under Transport (13.0%); Food and Non-alcoholic Beverages (8.6%); and Housing, Water, Electricity, Gas and other fuels (7.8%) between July 2022 and July 2023," KNBS report read in part.

In July 2023, inflation stood at 8.3%, as the consumer price index soared to the high of 9.6% reported in October.

In June 2023, the Central Bank of Kenya (CBK) Monetary Policing Committee (MPC) increased the benchmark interest rate by one per cent.

The regulator noted it had no option but to raise the Central Bank Rate (CBR) to curb inflation amid global uncertainties.

Reducing prices of food items and cooking gas

Prices of most food products, including potatoes, tomatoes, cowpeas and cabbages, declined by 12.2%, 10.1%, 8.3 and 8.1%, respectively, in July 2023.

A spot check by TUKO.co.ke in open-air markets showed the price of a bucket of potatoes dropped from a high of KSh 700 to an average KSh 400.

The housing, Water, Electricity, Gas and Other Fuels Index, decreased by 1.2% between June 2023 and July 2023.

Prices of cooking gas decreased with a 6kg cooking gas refilling at an average cost of KSh 900 to KSh 850.

"During the review period, the prices of 13Kg gas/LPG, electricity 200 kilowatts and electricity 50 kilowatts decreased by 9.2%, 5.3% and 4.4%, respectively, between June 2023 and July 2023," the report continued.

This followed a move by the government to remove all taxes on imported Liquified Petroleum Products (LPG).

Rising fuel, electricity prices

KNBS reported an increase in fuel prices, with a litre of kerosene rising by 5%, petrol by 6.9% and diesel by 7.4%.

The Energy and Petroleum Regulatory Authority (EPRA) announced changes in pump prices following the 16% Value Added Tax (VAT) implementation on July 1, 2023.

A litre of super petrol, diesel and kerosene increased by KSh 13.49, KSh 12.39 and KSh 11.96, respectively.