Kenya Inflation Surges to 19-Month High on Food, Fuel Costs

(Bloomberg) -- Kenyan inflation accelerated to the highest rate in 19 months in April as food and transport prices surged.

The inflation rate rose to 6.6 percent from 4.4 percent in March, the Kenya National Bureau of Statistics said Tuesday in an emailed statement. Prices rose 3.5 percent in the month.

Key Insights

• The price of food and non-alcoholic drinks -- which make up more than a third of the inflation basket -- rose 8.2 percent in April from a year earlier, compared with 2.8 percent in March. Costs are being pushed up by a drought which has left more than a million people in need of food aid.
• Transport prices rose 10.8 percent from a year ago after climbing 10.1 percent in the previous month.
• While inflation has been inside the central bank’s target for almost two years, it is now at the highest level since September 2017. The Central Bank of Kenya has set an inflation target of 5 percent with a margin of 2.5 percentage points on either side.
• Price growth is likely to quicken significantly, largely driven by increases in food costs due to constrained domestic production, the agency said in a report last week. This could worsen if fuel price increases are substantial, the agency said.
• Kenya’s central bank has held its key rate at 9 percent since July and policy makers reaction to the inflation surge will be “nothing for the moment,” according to Razia Khan, Standard Chartered Bank Plc’s Chief economist for Africa and the Middle East. “There isn’t yet the evidence of price pressures being sufficiently broadbased –- or any pronounced secondary impact of food price pressures,” she said in an emailed note.
• Standard Chartered expects a 50 basis points rate increase in September, she said.

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, Hilton Shone

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