MPs’ report warns of a tougher life ahead for more Kenyans
MPs’ report warns of a tougher life ahead for more Kenyans amid food and fuel prices which are at the centre of Kenya’s inflation crisis
A parliamentary report has revealed that delayed rainfall, the Russia-Ukraine war, and a weak shilling are likely to push more Kenyans into poverty.
According to the Parliamentary Budget Office’s prediction for the 2022–2023 budget year, the local and global factors that are beyond its control could cause a rise in food and fuel prices, which are at the heart of Kenya’s inflation crisis.
The estimated maximum inflation rate of 7.5% has been exceeded over the past few months. Inflation in August reached an unprecedented 8.5%.
Rainfall
With President William Ruto ordering his administration to allocate Sh2 billion to fighting starvation, one of the worst droughts to hit the nation in four decades has already put an estimated four million Kenyans at risk of going hungry.
The billions earmarked to Kenya’s food and fuel subsidy programs have already been used up, according to a warning from the Parliamentary Budget Office.
“These drought conditions appear likely to persist for the rest of the year as the meteorological department predicts below-average rainfall in the October to December 2022 short rains season. The government is therefore expected to provide adequate resources not only towards drought mitigation measures such as relief food but also towards long-term food security measures…”
“…It is noted that these were not adequately prioritized in the 2022/2023 budget. The allocation for the government subsidy programs on food and fuel had also been exhausted before the end of the financial year,” the Parliamentary Budget Office says in the report.
As the food crisis rages on, fuel prices are expected to remain at a historic high following the eight-year-old war between Russia and Ukraine, which escalated in February.
Biting economy as inflation hits record high on the back of runaway food prices
Oils
For Kenyans, this means the cost of fuel locally will remain high in the course of the war, which will increase transport costs.
Ukraine has also struggled to trade with other countries, making things harder for Kenya which relied on her for cereals, and animal and vegetable oils.
In Kenya, this means that the cost of imports, whether by the government or private sector, has also gone up making life tougher for Kenyans.
“This business environment has been complicated by the fact that the Covid-19 global pandemic had already created business challenges in the manufacturing and hospitality industries that were just starting to recover before the Ukraine-Russia conflict,” the MPs’ report states.
“Higher inflation is likely to erode the purchasing power of consumers leading to a slowdown in consumption and overall economic activity. The impact will be disproportionately felt among the lower-income earners who may then be pushed further into poverty,” the report adds.
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