Kenyan Inflation Rate Falls in August as Food-Price Growth Slows

(Bloomberg) -- Kenya’s inflation rate fell to the lowest in five months August as food-price growth cooled.

Consumer inflation in East Africa’s biggest economy slowed to 5% from 6.3% in July, the Kenya National Bureau of Statistics said Friday in an emailed statement. Prices fell 0.9% in the month.

Key Insights:

• Food inflation, which make up more than a third of the basket, slowed to 7.1% from 8.5% reported for July. That’s even as an estimated 3.08 million people will require food aid by October after the delayed onset of the main rainy season hurt corn production earlier in the year. Harvests of the staple from a key region could drop by 25% of the country’s five-year average, according to a drought-management agency.
• While the risk of the inflation rate breaching the 7.5% upper end of the central bank’s target range in the second half of the year has declined, it remains significant, according to Bloomberg Economics. An 8% value-added tax on fuel products that was implemented last September will soon fall out of the year-on-year calculation, helping to shrink the gap between the headline and core rates.
• The central bank retained its benchmark rate at 9% for a sixth consecutive time at its meeting on July 24, while warning it would monitor the impact of fuel-price increases and heightened uncertainty due to trade tensions and Brexit on inflation.

To contact the reporter on this story: David Herbling in Nairobi at dherbling@bloomberg.net

To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Helen Nyambura, Rene Vollgraaff

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