Biting economy as inflation hits record high on the back of runaway food prices
Inflation hits record high on the back of runaway food prices with Kenyans struggling to make ends meet.
As a result of skyrocketing prices for food, fuel, as well as household furnishings and appliances, Kenya’s cost of living index reached a 65-month high in President William Ruto’s first full month in office, the statistics agency said on Monday.
A measure of the cost of living over the past 12 months, inflation increased to 9.6% in October from 9.2% in September.
The increase in the price of necessities will make it even more difficult for households to buy, as they have already been compelled to reduce non-essential spending due to the slow growth of real income.
The cost of living increased at its quickest rate since May 2017, when inflation was 11.7 percent.
According to the Kenya National Bureau of Statistics, consumers paid 15.8 percent more on groceries than they did a year ago, while transportation costs rose by 11.6 percent (KNBS).
While housing, water, electricity, and fuel prices increased 7.1 percent from October 2021 to October 2019, the average cost of household equipment and furnishings increased 10.9 percent year over year.
After the Kenya Revenue Authority increased excise duty by 6.3 percent to reflect the average price rise for the fiscal year that ended in June 2022, the cost of alcoholic beverages including beer and whiskey also increased by an average of 6.7 percent.
Kenya is battling the worst drought in 40 years, hurting food production in a country where farming activities are largely dependent on rainfall.
Because food makes up up to a third of household expenditures, according to the KNBS, decreased output of staples like maize typically increases the cost of living overall.
Kenyans recently saw a more significant increase in cost of living more than five years ago, during a comparable period of protracted dry weather.
The previous administration of President Uhuru Kenyatta tried to subsidize the price of a two-kilogram packet of maize flour in the middle of July, but it was unsuccessful because consumers found it difficult to buy the product in retail stores despite the fact that it had cost the taxpayers more than Sh8 billion in a single month.
President William Ruto who had pledged to lower the cost of living during presidential campaigns has ruled out costly consumption subsidies on flour, saying they are unsustainable.
The President has also dropped subsidies on petrol but cut the cushion on diesel and kerosene.
The KNBS data shows a kilogramme of sugar jumped 36.3 percent year-on-year to Sh154.95 on average last month, two-kilo maize flour climbed 33.5 percent to average Sh177.66, while Irish potatoes went up 32.6 percent to Sh90 per kilogramme.
The cost of diesel, largely used for running farm machinery and transportation, surged fastest at 47 percent to Sh163.92 per litre on average while kerosene — largely used for lighting by poor rural households — retailed at Sh147.87, a 41.6 percent climb.
“The second round of inflationary pressure could persist into 2023 due to higher electricity prices, higher domestic fuel pump prices, and the excise duty hike from October,” Mulalo Madula, an economist at South African-based Standard Bank, the parent firm of Stanbic Bank, wrote in the Purchasing Managers Index (PMI) report for September.
“In fact, this could restrain consumer spending in the near term.”
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