Inflation rises just before new taxes kick in

 Inflation rises just before new taxes kick in

The cost of basic items may hit a 5 percent increase this month following new tax adjustments that kick in on August 1.

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Kenya National Bureau of Statistics (KNBS) released latest figures that put inflation in July at 4.35 percent month on month, up from 4.28 percent in June.

Central Bank Governor Dr. Patrick Jorge says the new tax measures will only bump up inflation by 0.37 percentage points which will bring inflation to the mid-range of CBK’s target of 5 percent.

A further bi-annual increase in excise tax will also kick in today. Kenya Revenue Authority (KRA) boss John Njiraini on July 2, 2018, invoked the rule when he set out about 5 percent adjustment on excise tax to general rise in the cost of goods.

Water and non-alcoholic beverages attracted the least adjustment at 4 percent, fruit juices, and alcoholic products at 5 percent. Tobacco products and motorcycles attracted the highest at 5.2 percent after the government turned a deaf ear to manufacturers and imposed new taxes.

Related: High sugar, fuel prices push July inflation to 4.35pc

Inflation last month was driven by a slight increase in kerosene, electricity and cooking gas prices. Transport prices also edged up slightly on increase in petrol prices which outweighed the decrease in diesel prices.

There was, however, a general drop in food prices reducing the food index by 0.9 percent.

Tax Alert-Commissioner General implements inflation adjustment to excise duty rates.cleaned
         Source: PWC



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