A spike in food prices boosted Kenya’s headline annual CPI inflation rate to a five-month high of 6.31% in March from 5.61% in February, data from the Kenya National Bureau of Statistics (KNBS) showed. However, inflation remained within the government's medium-term target of 5% plus/minus 2.5pp for the seventh month in a row after a temporary breach in July and August.

The prices of food and non-alcoholic beverages, which are the main inflation driver with a 36.04% weight in the consumer basket, jumped 11% y/y, accelerating from an 8.7% y/y growth in February due to dry weather conditions.

The prices of housing, water, electricity, gas and other fuels, which account for 18.3% of the total consumer price index, grew 2.92% y/y, easing from a 3.27% y/y growth in February.

Transport costs, which have an 8.66% weight, grew 2.77% y/y, slowing from a 3.42% y/y rise in the previous month.

Kenya’s monthly headline inflation rate slowed to 1.12% in March from 2.93% the month before, as food prices rose 2.65% (+5.01% in February), the cost of housing, water, electricity, gas and other fuels edged down 0.05% (+1.09% in February), and transport costs fell 0.33% (-0.96% in February).

The Central Bank of Kenya (CBK) noted in February that although soft oil prices continue to support price stability, there is risk for foreign exchange volatility and inflation amid divergent monetary policy paths taken by major advanced economies. It retained its benchmark interest rate at 8.5%.