Kenya’s March Inflation Inches Higher to 5.9% on Transport Costs

Kenyan inflation quickened in line with expectations in March as transport costs rose due to an increase in fuel prices.

Consumer prices rose 5.9% from a year earlier, Nairobi-based Kenya National Bureau of Statistics said Wednesday in an emailed statement. That compares with a 5.8% increase in February. The median of five economists’ estimates in a Bloomberg survey was 5.9%. Prices rose 0.4% in the month.

Key Insights:

  • The release comes two days after the central bank held its benchmark interest rate at 7% for the seventh straight meeting, saying inflation remained well-anchored and is expected to stay in target supported by lower food prices and muted demand pressures.
  • The Central Bank of Kenya has an inflation target of 5% with a margin of 2.5 percentage points on either side and has managed to keep price growth inside this band since September 2017.
  • Prices of food and non-alcoholic drinks, which makes up a third of the inflation basket, grew 6.7% due to increases in the cost of items such as mangoes and beef.
  • Intermittent dry spells in breadbasket regions of Western, Rift Valley and central Kenya in the planting season of April through May may affect crop yields, according to Bernard Chanzu, the director of reporting services at the Kenya Meteorological Department. That could add upward pressure on food prices.
  • Fuel inflation has been on the rise since last year, due to increasing oil prices and the cost of diesel went up 5.6% in a March 14 review. However, that’s expected to have a moderate impact on overall inflation, according to the central bank.
  • The housing, water, electricity, gas and other fuels index increased by 4% and the transport index jumped by 18%.

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