Kenya’s Inflation Hits 6.5% in July as Food and Electricity Costs Increase

Kenyan households continued to feel the pressure of a rising cost of living in July after annual inflation edged up to 6.5 per cent from 6.4 per cent recorded in June, driven mainly by higher electricity tariffs and increased food prices.

The latest figures show that while fuel prices remained unchanged and cooking gas became slightly cheaper, the cost of many everyday essentials continued to rise, leaving consumers spending more on basic needs.

According to data released by the Kenya National Bureau of Statistics (KNBS), the overall Consumer Price Index (CPI) increased by 0.2 per cent between June and July, indicating that the average prices paid by consumers for goods and services continued to rise during the month.

The latest reading marks the second consecutive month that inflation has remained above six per cent. Inflation climbed to 6.7 per cent in May, eased slightly to 6.4 per cent in June and has now inched up again to 6.5 per cent in July. Earlier in the year, inflation had remained relatively lower before accelerating as food, transport and household utility costs gathered pace.

Inflation contributors

The KNBS data shows that Food and Non Alcoholic Beverages, Transport, and Housing, Water, Electricity, Gas and Other Fuels remained the biggest contributors to inflation. Together, these three categories account for more than 57 per cent of the total consumer basket used to calculate inflation, meaning changes in their prices have the greatest effect on household spending.

Food prices continued to be the biggest concern for many families. Food inflation stood at 9 per cent compared with July last year, reflecting the continued rise in the cost of several commonly consumed items.

Although shoppers paid less for tomatoes, carrots and sifted maize flour during the month, those savings were offset by higher prices for Irish potatoes, beef and mangoes. The mixed movement in food prices meant that overall food costs remained elevated, especially for households that rely heavily on fresh produce and protein.

Food alone contributed 2.6 percentage points to the country’s overall inflation rate, making it the single largest driver of rising consumer prices.

Electricity costs also placed additional pressure on household budgets. Consumers using an average of 200 kilowatt hours of electricity saw their bills rise by 3.1 per cent, while households consuming 50 kilowatt hours experienced a 3.5 per cent increase in tariffs.

There was, however, some relief in energy costs. The average price of refilling a 13-kilogram LPG cooking gas cylinder declined by 1.1 per cent during the month, helping reduce cooking expenses for households that use liquefied petroleum gas. Pump prices for both petrol and diesel also remained unchanged after the Energy and Petroleum Regulatory Authority maintained fuel prices during its latest review period.

Transport continued to weigh heavily on household budgets despite stable fuel prices. Annual transport inflation stood at 15.6 per cent, one of the highest among the major spending categories.

While fares for inter-town bus travel declined slightly, commuters in many urban centres continued to spend more on matatu and boda boda transport, reflecting the continued pressure on daily travel expenses.

The latest inflation figures highlight how the cost of living remains a challenge for many Kenyans even as some essential commodities become cheaper. Stable fuel prices and lower cooking gas costs have provided limited relief, but increases in electricity charges and food prices continue to outweigh those gains.

Kenya’s inflation also remains within the Central Bank of Kenya’s medium-term target range of 2.5 per cent to 7.5 per cent, although it has moved closer to the upper end over the past three months. Economists will be watching whether food supply improves and utility costs stabilise in the coming months, as these factors are likely to determine whether inflation begins to ease again or remains above six per cent.