March inflation drops to 5.7% on lower fuel cost
Kenya’s inflation rate saw a decline in March 2024, easing to 5.7 percent from 6.3 percent in February, according to the latest data released by the Kenya National Bureau of Statistics (KNBS). This decrease in inflation comes as a relief to individuals and businesses, particularly in the face of fluctuating global economic conditions.
The KNBS highlighted a year-on-year comparison, indicating that the general price level in March 2024 was 5.7 percent higher than in March 2023. The main drivers of this inflation were identified in three critical sectors: Transport, which saw a 9.7 percent increase; housing, water, electricity, gas, and other fuels, with an 8.0 percent rise; and food and non-alcoholic beverages, which went up by 5.8 percent.
These sectors collectively contribute to over 57 percent of the inflation measurement, reflecting their significant impact on the overall cost of living.
KNBS’ month-on-month inflation analysis, which stood at 0.2 percent for March, marginally higher than February’s 0.1 percent primarily attributed to the price adjustments in the aforementioned key sectors.
A breakdown of the report revealed specific commodities that experienced price drops, contributing to the overall decrease in inflation. Maize flour (loose), maize flour-sifted, sugar, and fortified maize flour prices fell by 9.6 percent, 5.8 percent, 5.3 percent, and 5.1 percent, respectively, from February to March 2024. These reductions in food prices played a crucial role in easing the inflationary pressures faced by Kenyan households.
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Inflation range 2.5% to 7.5%
Policymakers in Kenya target to maintain inflation within the range of 2.5 percent to 7.5 percent over the medium term. This recent report suggests that the efforts to stabilize prices within this preferred range are bearing fruit, albeit challenges remain in controlling the cost of essential services and goods.
In response to the evolving economic landscape, the Central Bank of Kenya is scheduled to announce its latest decision on the lending rate on April 3, 2024. The CBK previously increased its benchmark rate to 13 percent from 12.5 percent in an effort to curb inflationary pressures.
Further analysis of the report showed a mixed picture in the utilities sector, with the housing, water, electricity, gas, and other fuels’ index inching up by 0.2 percent between February and March 2024.
This slight increase was mainly due to a 1.4 percent rise in gas/LPG prices. However, kerosene prices dipped by 2.3 percent, and electricity costs for 200 kWh and 50 kWh usage levels decreased by 0.3 percent and 0.4 percent, respectively.
The Transport Index, on the other hand, declined by 0.6 percent during the same period, thanks to significant drops in petrol and diesel prices by 3.5 percent and 2.6 percent, respectively in the March 15 to April 14 price review period.
This decrease in transportation costs is a welcome development for both consumers and businesses, helping to alleviate some of the cost burdens.
