Kenya Inflation Slows to Six-Month Low in November on Food Costs

(Bloomberg) -- Kenyan inflation slowed for the second consecutive month in November, reaching a six-month low as food price-growth decelerated.

The East African nation’s annual inflation rate rose to 5.8%, compared with 6.45% in October, Nairobi-based Kenya National Bureau of Statistics said Tuesday in an emailed statement. The median of five economists’ estimates in a Bloomberg survey was 6%. Prices rose 0.45% in the month.

The food and non-alcoholic drinks index, which comprises a third of the inflation basket, rose 9.92% from a year ago, compared with a 10.6% increase in October. The cost of items, including sugar and cooking oil, drove up the food index. The transport index rose 8.14%, almost similar to last month, as gasoline and diesel prices remained steady.

Key Insights

• Inflation stays inside the Central Bank of Kenya’s target range of 2.5% to 7.5% and is expected to stay within aim in the near term as demand pressures remain muted, Governor Patrick Njoroge said Monday after announcing the decision to keep the benchmark interest rate unchanged at 7%.
• A key risk to price growth is unfavorable weather and desert locusts, which could curb the production of food crops and animal feeds, according to the National Treasury. A global rally in prices of wheat, Kenya’s second most important cereal after corn, has resulted in an increase in the cost of bread and pastries.
• A looming inflation adjustment of almost 5% on excise duties on items including fuel, fruit juices and alcoholic drinks, will further add to inflationary pressures if the current suspension of the measure by a court ruling is lifted.

©2021 Bloomberg L.P.