Kenya’s inflation down after a drop in maize prices

Wednesday November 7 2018

A customer compare the prices of the different brands of maize flour at a supermarket in Nakuru, Kenya.

A customer compare the prices of the different brands of maize flour at a supermarket in Nakuru, Kenya. Statistics show that inflation dropped to 5.53 per cent for the month of October as the price of a 2kg packet of sifted maize flour dropped by 14.4 per cent from an average of Ksh98 ($0.98) in September 2018 to Ksh83 ($0.83) in October. FILE PHOTO | JOSEPH KIHERI | NATION 

By MARYANNE GICOBI
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Kenya's inflation eased by 0.17 points in October from an 11-month high in September, on the back of a drop in the price of maize.

Inflation had reached 5.70 per cent in September, attributed to the introduction of new taxes on fuel as the government sought to boost expenditure and cut its budget deficit.

The latest Kenya National Bureau of Statistics report shows that inflation dropped to 5.53 per cent for the month of October as the price of a 2kg packet of sifted maize flour dropped by 14.4 per cent from an average of Ksh98 ($0.98) in September 2018 to Ksh83 ($0.83) in October.

The easing in inflation was also attributed to a drop in prices of various vegetables.

Even with the fall in inflation, the cost of utilities like electricity, water, gas and housing increased by 0.20 per cent and the rise in the index was due to increase in house rents.

Last week, the Energy Regulation Commission cut retail electricity prices for domestic customers and small businesses following complaints about a tariff introduced in July.

The cut from 16 per cent tax on petroleum products to 8 per cent impacted the transport index which decreased by 0.86 per cent mainly due to a drop in petrol prices. In September, the transport index had risen to 7.99 per cent due to increased petrol and diesel prices.

Central Bank Governor Patrick Njoroge, in the last Monetary Policy Committee meeting, said he expected inflation to remain within the government’s preferred band of 2.5-7.5 per cent, despite the pressure from the new tax.

In Uganda, October’s inflation decreased to 3.0 per cent from 3.7 per cent, attributed to a drop in price on food and vegetables.

Inflation on energy and fuel also declined to 6.9 per cent last month compared with 10.1 per cent recorded in September 2018.

According to the Uganda Bureau of Statistics, the decrease on fuel inflation was largely attributed to falls in charcoal and kerosene prices. Sugar and maize flour prices in Uganda also dropped.

In Kenya, the shilling was under pressure against the dollar due to excess liquidity in the money markets and end-month demand from oil importers and manufacturers.

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