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Kenya Sees Inflation-Rate Drop as Economists Predict Increase

Some economists think the only way for Kenyan inflation is up. A central bank survey shows otherwise.

Analysts at Capital Economics Ltd., NKC African Economics, Bloomberg Economics and Absa Bank Ltd. all say that consumer-price growth, which was at a more-than five-year low in April, has bottomed out and will start accelerating.

The Central Bank of Kenya, however, sees inflation slowing in the near term due to lower food prices, it said May 28, citing a private-sector market-perception survey conducted this month. Farming output is recovering from a 2016 drought that raised the cost of food.

Monetary-policy makers in East Africa’s biggest economy kept the benchmark rate at a three-year low of 9.5 percent this week as they wait for the effects of an easing two months ago to feed through. Inflation expectations are well-anchored within the target band of 2.5 percent to 7.5 percent, Governor Patrick Njoroge said in the statement announcing the decision.

Data published by the Kenya National Bureau of Statistics on Thursday show the inflation cycle may already have turned as price growth quickened to 4 percent in May.

A recovery in domestic demand and relatively high energy prices could push inflation toward the upper end of the central bank inflation-target band in in the fourth quarter, Samantha Singh, a senior strategist for Africa at Absa Bank Ltd., said in an emailed note.

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