By Radarr Africa Business Desk
LAGOS, November 2 (Radarr Africa) – Kenya’s annual inflation rate rose to 7.3 per cent in October from 6.8 per cent in September, moving close to the upper limit of the Central Bank of Kenya’s (CBK) target band as higher fuel and food prices fed through to households, according to figures from the Kenya National Bureau of Statistics (KNBS).
The KNBS report, released on October 30, showed transport prices up 17.1 per cent year on year, the largest annual increase among the categories reported by Kenyans.co.ke. Food and non-alcoholic beverages rose 10.2 per cent, while housing, water, electricity, gas and other fuels rose 3.7 per cent.
The KNBS report said the October rate was “approaching the Central Bank of Kenya’s upper target limit” of 7.5 per cent, Kenyans.co.ke reported. The rate is 0.2 percentage points below that limit.
Core inflation, which strips out volatile items, rose to 4.3 per cent from 4.0 per cent in September, while non-core inflation rose to 15.1 per cent from 14.0 per cent.
Pump prices rose sharply. Petrol increased from Ksh214.95 to Ksh227.85 per litre, diesel from Ksh219.04 to Ksh228.77, and kerosene by 14.7 per cent, from Ksh192.56 to Ksh220.88, according to the KNBS figures cited by Kenyans.co.ke. The fare on a matatu between Westlands and Kangemi in Nairobi rose from Ksh40 to Ksh50.
Food prices were mixed. A 500ml packet of milk rose from Ksh61.23 to Ksh64.13, while a kilogram of sugar fell from Ksh165.79 to Ksh163.84. The cost of 200 units of electricity eased slightly, from Ksh5,533.76 to Ksh5,529.66.
The reading was above forecasts. Briefs Finance reported that the median of four economists surveyed by Bloomberg was 7 per cent, and that the central bank had projected 6.9 per cent.
The publication said diesel prices have risen 61 per cent and petrol prices 48 per cent since the Iran war began in late February, and that fuel price increases have sparked public protests. It added that bad weather and supply interruptions in fuel, grain and fertiliser, linked to the Ukraine and Iran conflicts, are adding to price pressure.
CBK Governor Kamau Thugge warned that if crude oil rises above US$110 a barrel, inflation could exceed the upper limit of the central bank’s target band, Briefs Finance reported. It noted that crude passed that level in the week before its report.
Shani Smit-Lengton of Oxford Economics told the publication: “We expect headline inflation to average 7.9%” in the fourth quarter. She said that would support a 50 basis point rate increase in December.
The CBK’s policy rate has stood at 8.75 per cent since February, according to Briefs Finance, which said the data raises the prospect of the first rate hike since 2024.
Kenyans.co.ke put the path of inflation this year at 4.3 per cent in February, 5.6 per cent in April, 6.7 per cent in May, 6.4 per cent in June, 6.5 per cent in July, 6.6 per cent in August and 6.8 per cent in September, before the October rise to 7.3 per cent.
Oil prices remain a key variable. Brent crude futures fell 3.2 per cent to US$109.75 a barrel on Monday on hopes of talks to end the Iran war, Reuters reported, after ending October at their highest in six months.
