Kenyan Inflation Climbs to 6.4% in July; Prices Seen Moderating

  • Gasoline, food push prices up as new taxes filter through
  • Central bank seen reducing rates further before year-end

Kenya’s headline inflation accelerated 6.4 percent in July from 5.8 percent in the previous month on rising food and beverage prices, the statistics agency said.

The food and non-alcoholic drinks index rose by 1.12 percent from June to July as a “result of increase in prices of some food items, which outweighed those that declined,” Kenya National Bureau of Statistics said Friday in an e-mailed statement from the capital, Nairobi.

Increases in pump prices of petrol and diesel pushed up the transport index by 1.13 percent, the agency said.

Despite rising prices, inflation will likely remain within the government’s target band of 2.5 percent to 7.5 percent until mid-2019, Razia Khan, chief economist for Africa at Standard Chartered Bank, said in an e-mailed statement.

“We see the inflation outlook as relatively benign,” she said. A moderate inflation outlook and a stable currency affords the Central Bank of Kenya space to cut rates by another 100 basis points during the next two monetary policy committee meeting this year, Khan said.

Central bank Governor Patrick Njoroge held the country’s benchmark rate at 10.5 percent at this month’s meeting, after a 100 basis point cut in May.