Revealed: Govt Interventions That Have Eased Cost Of Living In Kenya

The year-on-year inflation rate for February 2025 stood at 3.5%, which is a significant drop from 6.3% in February 2024. This shows that retail prices increased at a slower rate of 3.5%.

Her’s a list price changes on key commodities (February 2024 and 2025);

From the CPI basket of goods and services consisting of 330 items, the highest decline in average retail prices was in kerosene/paraffin per litre and the highest increase was in hire of tents.

Generally, there was a decline in prices of common user goods and services in the electricity, diesel, petrol, milk, sugar, maize grain, maize flour and wheat flour. The price of one litre of edible oil increased by 5.0 per cent from Ksh333.31 in February 2024 to Ksh350.10 in February 2025. The reduction in prices of the key commodities signals continuous improvement of the economy and creates optimism.

Regional Price Variations

Consumers across various regions experienced a notable decline in prices, offering much-needed relief, particularly in essential commodities.

The table below shows price changes by region (February 2024 and February 2025);

From the four selected regions, it is noted that there was a general decline in prices of most of the common commodities. The decline in the price of 1kg of sugar ranged from 19.8% to 25.1%. The highest decline in absolute terms was in North Eastern, which registed a decline of Ksh51.84 from Ksh206.7 in February 2024.

The price of a litre of Kerosine in the selected regions reduced by over 20%. The largest reduction was registered in the coast region, which registered a decline of Kshs 41.9 from kshs 190.6 in February 2024.

The price reductions underscore the positive impact of government interventions and market stabilization efforts, ultimately enhancing affordability of goods and services while easing the financial burden on households across the country.

Govt interventions

The decline in prices reflects the effect of various government policy measures and interventions that include among others;

1.Prudent monetary policy measures

Stability in  exchange rate:  The exchange rate  to  the dollar strengthened significantly to Ksh 129.4 by end January 2025 from Ksh160.8 by end January 2024. This rate has since stabilized in the Ksh 128- 130 range to the dollar.

Given the outcome of inflation, CBK has gradually eased monetary policy by lowering the Central Bank Rate (CBR from 13% in August 2024 to 11.25% in December 2024 and down further to 10.75% in February 2025.

In addition, CBK in the February 2025 MPC meeting reduced the Cash Reserve Ratio (CRR) by 100 basis points to 3.25% from 4.25% to lower the cost of funds for banks. This will further support lowering of lending rates and support growth of credit to the private sector.

With the easing of CBR to 10.75% in February 2025 and reduction in the Cash Ratio Requirement to 3.25% from 4.25%, commercial banks have this week demonstrated lowering of interest rates with higher percentages. Several banks have already reduced their base lending rates – e.g. Co- op Bank from 16.5% to 14.5% and KCB from 15.6% to 14.6%, Equity from 17.3% to 14.3% among others such as ABSA, NCBA. It is expected that more banks will follow suit.

The reduction of interest rates charged by banks to the private sector is likely to expand credit to private sector, encouraging investment, creating jobs and improving the general liquidity in the economy.

2. Subsidizing Production

In order to lower the cost of living, the Government provided production subsidies, particularly in fertilizer and seeds, which has led to improved agricultural output and food supply, which in turn drove down food prices.

Maize production increased to 95 million 50kg bags of maize in 2024 compared to the 61 million of 50kg bags that was harvested in 2023. Wheat production rose to 10 million bags of wheat in 2024.

Cane deliveries increased from 5,483,550 metric tonnes in 2023 to 9,333,210 metric tonnes in 2024. Domestic sugar production went up from 472,773 Metric tonnes in 2023 to 815,454 metric tonnes in 2024.

The progress observed in the sugar industry further reflects improved governance that has attracted investors, enhanced productivity and increased sugar production. Some of the interventions to increase sugar production include bonus programmes for sugarcane farmers, writing off of KSh117 billion in debts, payment of KSh1.7 billion in sugarcane farmers’ arrears and KSh650 million owed to employees. The increased sugar production has boosted income for sugarcane farmers while sugar consumers   are   enjoying   lower   prices.   For   the   first   time   since independence, Kenya did not import sugar in 2024.

3. Appreciation and Stabilization of the KSh against the USD

In the energy industry, including petroleum products and electricity, the interventions that have yielded benefits include stabilisation of the Kenya shilling against the US dollar. This has contributed to the lower landing cost of petroleum products, together with global trends in crude oil prices.

Further, the stabilisation and strengthening of the Kenya Shilling has contributed to lower pass-through costs to consumer electricity tariffs, including fuel and forex adjustment costs.

4. Access to credit and funding

The Hustler Fund marked its second anniversary on a highly successful note in 2024, having empowered Kenyans by lending a total of KSh60 billion. This liberated millions from predatory lenders and precarious financial situations, enabling them to meet their needs, fund their hustles, and build their credit scores.

5. Social Protection Measures

The government expanded cash transfer programmes under the Inua Jamii initiative supporting orphans and vulnerable children, older persons, persons living with disabilities, and hunger safety-net programmes. Under the old persons cash transfer, the number of beneficiaries increased from 756,485 in 2022/2023 to 815,071 in 2023/2024. In February 2025, the government disbursed Ksh.3.52 billion to 1.76 million households under the Inua Jamii programme.

Other interventions include;

1. Subsidies and Support Programs targeting agriculture, and food production to increase supply and ensure continued affordability.
2. Monetary policy measures that moderate imported

• Monitoring of Market Prices to institute timely remedial measures and prevent unwarranted price increases to ensure fair trade

Read: What Is Kenya Inflation Rate And Why Is The Cost Of Living Rising?

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