Food prices expected to drop as harvesting starts

Wakulima market

Customers shop for fruits at a stall in Wakulima market in Nairobi on August 8, 2023.

Photo credit: Billy Ogada | Nation Media Group

Prices of food items have started to drop after supplies of fresh harvests hit the market in a welcome relief for Kenyans who are struggling to afford the cost of sugar, fuel, electricity and transport.

The Central Bank of Kenya’s (CBK) July 2023 Agriculture Sector Survey, which tracked prices of agricultural commodities in select markets and farms last month, shows a downward trend in prices in July.

The survey found that retail prices of key food items except sugar, onions and certain maize products generally declined in July 2023 and that supply of key food items is expected to increase in the coming months with the onset of bumper harvests due to favourable weather.

Prices of vegetables such as sukuma wiki and cabbages decreased in July, while tomato farmers revealed that supplies from the main source markets in Ndaragwa, Kirinyaga and other local farms had increased significantly.

The survey found that maize prices also reduced during the month as harvests from Lower Eastern, South Rift and Western, which are major producers of the staple, commenced. However, the price of some fortified maize flour, sifted maize flour, onions and sugar remained high on account of a shortage in supply due to reduced production.

The survey further found that prices of both packeted and unpackaged milk declined due to increased pasture which led to a reduction in the purchase of animal feeds, also boosted by the government’s decision in March to allow animal feed manufacturers to import 500,000 tonnes of duty-free yellow maize before August 6, 2023.

The survey has also attributed the lower food prices to the government’s fertiliser subsidy programme, which has lowered the cost of the input allowing more farmers to afford it thereby increasing production.

The survey findings closely mirror data published by the Kenya National Bureau of Statistics (KNBS) a fortnight ago, which showed inflation had eased to 7.3 per cent in July down from 7.9 per cent in June.

It was the lowest year-on-year inflation since May last year when it stood at 7.1 per cent, largely driven by lower food prices. Between June and July, the price of Irish potatoes dropped at the fastest rate of 12.2 per cent with a kilogramme selling for Sh89.07 in July down from Sh101.41 in the previous month.

The price of tomatoes fell by 10.1 per cent, cow peas by 8.3 per cent, a 250-millilitre of milk by 1.1 per cent, cabbages by 8.1 per cent and carrots by 6.1 per cent.

The CBK survey shows sugar prices rose further after the government suspended local milling until November 30 to allow cane to mature, leading to a shortage.

In another boost to consumers, the price of cooking gas has also dropped in recent months due to lower global prices. According to KNBS, the average price of cooking gas dropped by 9.2 per cent with the 13kg cylinder refiling at Sh2,787 in July down from Sh3,069 in June.

Pricing cycle

On Monday, the Energy and Petroleum Regulatory Authority (Epra) kept fuel prices unchanged for the August-September pricing cycle after reinstatement of the fuel subsidy despite a push by the International Monetary Fund (IMF) for full withdrawal of fuel and food subsidies.

If the subsidy was not applied, petrol, diesel and kerosene prices would have increased by Sh7.33, Sh3.59 and Sh5.74 per litre respectively.

The energy regulator also raised power prices for this month by 1.7 per cent. Epra raised the fuel energy charge to Sh4.46 per unit up from Sh4.02 last month, an increase of 11 per cent.

The net effect is that an ordinary domestic customer who paid Sh5,359 to buy 200 kilowatt-hours (kWh) of power last month will have to pay Sh5,454 this month to get the same quantity of electricity, an increase of 1.7 percent.