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.
|y/y inflation rate||Aug-15||Jul-15||Aug-14||weight|
|Food and non-alcoholic beverages||9.93%||12.14%||10.85%||36.04|
|Alcoholic beverages, tobacco and narcotics||3.25%||3.12%||4.44%||2.06|
|Clothing and footwear||4.76%||4.91%||4.95%||7.43|
|Housing, water, electricity, gas and other fuels||2.66%||2.21%||6.98%||18.3|
|Furnishings, household equipment and routine household maintenance||4.10%||4.08%||5.44%||6.16|
|Recreation and culture||3.01%||3.36%||12.73%||2.25|
|Restaurant and hotels||5.03%||5.30%||6.86%||4.48|
|Miscellaneous goods and services||5.08%||5.26%||4.45%||4.52|
|Source: Kenya National Bureau of Statistics|
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