Kenya and Burundi recorded a decrease in inflation in September and October, attributed to lower food prices and stability in the two economies.

Uganda and Rwanda reported a rise in inflation figures due to their currencies weakening against the dollar.

On Tuesday, Kenya maintained its indicative policy rate – the Central Bank Rate (CBR) — at 8.5 per cent, saying that the policy measures in place supported further declines in overall inflation towards the government’s 5 per cent target.

Kenya’s Consumer Price Index (CPI) decreased by 0.21 per cent, from 152.24 in September to 151.92 in October, with the overall inflation rate dropping to 6.43 per cent in October, from 6.60 per cent. 

This is the second consecutive time Kenya’s month-on-month inflation rate has fallen. The Kenya National Bureau of Statistics (KNBS) attributed the drop to the notable fall in the cost of food, electricity and fuel.

“Between September and October, the food and non-alcoholic drinks index decreased by 0.45 per cent. The decline in food inflation resulted from a fall in the prices of several food commodities, which outweighed notable rises in the prices of others,” the KNBS said in a statement.

Food costs rose

In Burundi, inflation fell to 5.5 per cent in September from 5.9 per cent in August, as food costs rose gradually.

According to Burundi’s Institute of Economic Studies and Statistics (Isteebu), food price inflation dropped to 2.4 per cent in September, from 3.1 per cent in August, after the cost of housing, water and energy dropped sharply.

In Kenya, the overall inflation rate of 6.43 per cent is within the Central Bank’s preferred medium term range of 2.5 per cent to 7.5 per cent. In October, housing, water, electricity, gas and other fuels’ index decreased by 0.23 per cent.

“Contributing to the fall in electricity was a fuel cost adjustment, from Ksh5.71 ($0.06) per kWh in September to Ksh4.79 ($0.05) per kWh in October,” said KNBS.

External events

Central Bank Governor Njuguna Ndung’u said the exchange rate remained stable despite short-term pressures arising from external events in the Eurozone and the United Kingdom that have resulted in a “flight to safety” and the strengthening of the dollar.

“The month-on-month nonfood, non-fuel (NFNF) inflation, which measures the impact of the monetary policy stance, declined from 3.66 per cent to 3.47 per cent. This decline shows there was no inflationary pressure,” Prof Ndung’u said.

Uganda’s headline inflation rate rose to 1.8 per cent in October, from 1.4 per cent in September, due the rise in non-food prices.

In October, the Ugandan central bank forecast that over the next three months, annual core inflation will range between 2 per cent and 4 per cent, and this fiscal year, the economy will grow by 6 per cent.

Uganda’s inflation has also been fuelled by the pressure its shilling has been facing from the dollar. The local currency has been under pressure, largely from demand for dollars by importers to make payments for their monthly imports and those shipping in goods in preparation for the year-end holiday shopping surge.

Food, fuel and utilities

According to the Uganda Bureau of Statistics, core inflation, which excludes the prices of food, fuel and utilities, rose to 2.4 per cent in October, from 2.0 per cent in September.

The monthly headline inflation for October rose by 0.4 per cent due to a monthly rise in non-food prices, the UBS said in a statement.

Rwanda’s consumer price index (CPI) rose by 0.2 per cent year-on-year in September, down from 0.9 per cent in August.

In its September 2014 estimates, the BNR noted that the cost of clothing and footwear and education rose by 8.7 per cent and 7.1 per cent year-on-year, respectively, while the cost of local goods increased by 0.3 per cent on a monthly basis. The prices of imported products also increased by 1.2 per cent monthly.

In October, Paulo Drummond, the IMF’s deputy division chief in Africa, said that Rwanda’s inflation rate is expected to stand at 3.2 per cent at the end of the year, because of the country’s high energy costs and transport deficiencies.

A big challenge

“The costs of electricity, labour, transport and finance in Rwanda are a big challenge in bringing down inflation,” Mr Drummond said.

Data from the Tanzania National Bureau of Statistics shows that the food and non-alcoholic beverages inflation fell to 8.5 per cent year-on-year in September, from 8.8 per cent in August, while the consumer price index rose 0.4 per cent in September, up from 0.1 per cent in August.

Bank of Tanzania Deputy Governor in charge of Administration and Internal Controls Juma Reli said the bank’s focus was on keeping inflation at its lowest during the remaining months of the year.

“The ultimate goal of our monetary policy is to control inflation and maintain a healthy balance of payments,” Mr  Reli said.