Inflation remained one of the biggest economic concerns for Kenya throughout 2025. Although price pressures fluctuated during the year, the overall cost of living stayed high for many households.
From food and fuel to housing and utilities, several factors combined to keep prices elevated. Both domestic challenges and global economic conditions played a role in shaping inflation trends over the year.
1. Food prices and the rising cost of basic consumption
Food prices were the most persistent driver of inflation in Kenya in 2025. Staple foods such as maize flour, rice, cooking oil, sugar, and vegetables recorded sustained price increases across the year.
Erratic weather patterns affected agricultural production in key farming regions, leading to reduced supply at certain points.
At the same time, farmers faced higher production costs, including fertiliser, seeds, and fuel. These costs were passed on to consumers through higher market prices.
Since food takes up a large share of household spending in Kenya, increases in food prices had a significant impact on overall inflation and household welfare.
2. Fuel prices and transport costs across the economy
Fuel prices played a major role in driving inflation in 2025. Changes in global oil prices, combined with exchange rate fluctuations and local fuel taxes, impacted pump prices throughout the year. Higher fuel costs affected public transport fares, logistics, and the cost of running businesses.
Transport costs had a ripple effect across the economy. Goods became more expensive to move from farms and ports to markets, pushing up prices of food and manufactured products. For many households, increased matatu and boda boda fares added to the daily cost of living.
3. Housing, rent, electricity, and water expenses
Housing-related costs remained elevated in 2025, particularly in urban areas. Rent prices stayed high due to continued demand and the limited supply of affordable housing.
Many households also faced increased electricity and water bills, driven by higher generation costs and infrastructure-related charges.
These costs are largely fixed and unavoidable, meaning households have little room to adjust. Rising housing and utility expenses, therefore, contributed steadily to inflation over the year, especially for urban residents.
4. Exchange rate pressures and imported inflation
The performance of the Kenyan shilling was a key factor influencing inflation in 2025. Periods of currency weakness made imports more expensive. Since Kenya relies heavily on imports for fuel, machinery, pharmaceuticals, and certain food products, exchange rate fluctuations directly impact local prices.
Imported inflation showed up in higher fuel prices, increased costs of household goods, and rising production expenses for businesses. These pressures were felt even when domestic demand was subdued.
5. Global economic conditions and supply chain effects
Global economic developments also influenced inflation trends in Kenya during 2025. Disruptions in international supply chains, changes in trade policies, and higher production costs in exporting countries affected the prices of imported goods.
Shipping and insurance costs remained relatively high compared to pre-pandemic levels. These global factors made it more expensive to bring goods into the country, contributing to higher retail prices locally.
6. Domestic demand, wages, and business costs
Consumer demand in 2025 was mixed. While high unemployment and income constraints limited spending for many households, demand for essential goods and services remained strong. In some sectors, this demand, combined with rising business costs, contributed to higher prices.
Businesses faced increased operating expenses, including wages, rent, and energy costs. To stay afloat, many adjusted their prices upward, adding to inflationary pressure across the economy.
7. Broader cost of living pressures on households
Beyond food and fuel, Kenyans faced rising costs in education, healthcare, and household goods throughout 2025. School fees, medical expenses, and everyday items became more expensive, stretching household budgets.
Even when inflation eased at certain points in the year, prices remained high compared to previous years. This meant that the impact of inflation was felt not just through monthly increases, but through the accumulated cost of living over time.
In 2025, inflation in Kenya was driven by a combination of high food prices, fuel and transport costs, housing and utility expenses, exchange rate pressures, and global economic conditions.
While inflation showed periods of easing, underlying price pressures persisted, keeping the cost of living elevated for many households.
Leave a comment