markets

Kenyan Inflation Rate Rises for First Month in Five in January

  • Consumer prices advance 4.8 percent from a year earlier
  • Central bank has held rate at 10 percent since September 2016

Kenyan inflation accelerated for the first month in five in January as corn prices rose and crude costs increased.

Consumer prices climbed 4.8 percent from a year earlier, the Kenya National Bureau of Statistics said Wednesday in a statement emailed from the capital, Nairobi. Prices advanced 1.3 percent in the month.

A government-imposed cap on commercial lending rates, a drought and two disputed elections have weighed on economic growth in the world’s largest exporter of black tea. The central bank has left its key rate at 10 percent since September 2016. Governor Patrick Njoroge said last week there is a high level of optimism in East Africa’s biggest economy.

Prices of food and non-alcoholic drinks, which make up more than a third of Kenya’s inflation basket, rose 4.7 percent in January from a year earlier, and climbed 1.7 percent in the month.

The Energy Regulatory Commission has raised prices at fuel pumps for five straight months as global prices increase. The country made its final allocation to a program to reduce the price of a 90-kilogram (198-pound) bag of corn to 2,300 shillings ($22) from more than 4,000 shillings in October, the Business Daily newspaper reported in the same month.

“With the maize subsidy ending and higher fuel prices, the base is still quite high, and this will suppress the acceleration until at least May,’’ Stephanie Kimani, an economist at Nairobi-based Commercial Bank of Africa Ltd., said by phone before the announcement, using the local term for corn. “The MPC will take advantage of the low inflation-rate environment to adopt a more accommodative stance, particularly if they want hit the 6.2 percent economic growth target for 2018.”

— With assistance by Rene Vollgraaff

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