Price of basic commodities to remain High, CBK report
CBK says prices for some basic commodities will continue skyrocketing owing to the high inflation rate in the country
CBK says prices for some basic commodities will continue skyrocketing owing to the high inflation rate in the country.
On Monday, June 26, the Central Bank of Kenya (CBK) published a financial and monetary policy outlook that offered some rays of optimism for Kenyans facing real economic hardships.
In the most recent assessment, the Monetary Policy Committee of CBK noted that inflation had been high for three consecutive months.
In the coming months, the trajectory is anticipated with just minor modifications.
According to the CBK report, the high inflation rate—which reached 8.0%—continued to lead to record-high prices for basic commodities, including food, fuel, and non-food non-fuel prices.
“The Monetary Policy Committee (MPC) met on June 26, 2023, against a backdrop of continued global uncertainties, persistent inflationary pressures, a weak global growth outlook, geopolitical tensions, and measures taken by authorities around the world in response to these developments.
“The MPC reviewed the outcomes of its previous decisions and measures implemented to mitigate the adverse economic impact and financial disruptions,” MPS stated.
After a review of the economic performance in April, May, and June, MPC stated that the high inflation rate will continue to affect many households, especially, those of low-income earners.
“Overall inflation increased to 8.0 percent in May 2023 from 7.9 percent in April, driven by fuel, food, and non-food non-fuel (NFNF) prices.
Food inflation increased to 10.2 percent in May from 10.1 percent in April, largely due to a sharp rise in sugar prices.
“Prices of some key food items particularly vegetables declined following improved supply attributed to the long rains, and lower global food prices. Fuel inflation increased to 13.6 percent in May from 13.2 percent in April, mainly due to the removal of the fuel subsidy, and increases in electricity prices following upward adjustment of tariffs in April,” read part of the CBK report.
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CBK stated that it was monitoring the inflation situation closely and will take appropriate action to keep it in check, including regulation factors that contribute to a high rate.
The report further indicated that the banking sector remained stable and resilient, with strong liquidity and capital adequacy ratios. The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.9 percent in May 2023, compared to 14.6 percent in April.
CBK observed that increases in NPLs were noted in the manufacturing, trade, real estate, transport, and communication sectors. Banks have continued to make adequate provisions for the NPLs.
“Growth in private sector credit stood at 13.2 percent in both April and May 2023. Strong credit growth was observed in the following sectors: manufacturing (19.3 percent), transport and communication (22.0 percent), trade (15.4 percent), and consumer durables (11.9 percent).
“The number of loan applications and approvals remained strong, reflecting increased demand and resilient economic activities. The Committee noted the ongoing implementation of the FY2022/23 Government Budget, particularly the performance in tax revenue collection and the policy measures in the FY2023/24 Budget, which continues to reinforce fiscal consolidation,” read part of a report by CBK.
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