A further slowdown in food costs growth cut Kenya’s headline annual inflation to a six-month low of 5.84% in August from 6.62% in July, data from the Kenya National Bureau of Statistics (KNBS) showed. Thus, it remained within the government's medium-term target of 5% plus/minus 2.5pp for the 12th month in a row after a temporary breach last summer.

The prices of food and non-alcoholic beverages, which are the main inflation driver with a 36.04% weight in the CPI basket, rose 9.9% y/y, decelerating from a 12.1% y/y growth in July.

On the other hand, the prices of housing, water, electricity, gas and other fuels, which are the second biggest heavyweight with an 18.3% share in the basket, grew 2.7% y/y, speeding from a 2.2% y/y growth in July.

Transport costs, which have the third largest weight of 8.66%, fell 1.8% y/y, softening from a 2.5% y/y drop in July.

Kenya’s monthly headline inflation rate quickened to 0.21% in August from 0.07% the month before, as food prices eased 0.256% (-0.6% in July), the cost of housing, water, electricity, gas and other fuels grew 0.76% (+0.76% in July), and transport costs rose 1.42% (+0.93% in July).

On August 5, Kenya’s central bank maintained the benchmark interest rate at 11.5% after hiking it by a total of 300bp in June and July amid heightened inflationary pressures due to a sharp depreciation of its shilling currency and rising fuel prices.