December hit by highest inflation rate marked by soaring food prices

Have you ever wondered how your holiday trips, recreation and shopping spree around the festive season influence prices of essential commodities and, by extension, the economy? For many Kenyans, December is the time to sit back and celebrate their gains after a year of hard work.

Underneath the merry of Christmas though, is an economic reality that is not as flattering as latest data from the Kenya National Bureau of Statistics (KNBS) shows.

According to KNBS, inflation soared in the last four months leading to December, averaging at 5.63 per cent per month as demand for food stuff, clothing and transport rose.

The highest inflation in 2018 was in December at 5.71 per cent, while the lowest increase in prices was in April at 3.73 per cent.

LOGGING BAN

The price of food and non-alcoholic beverages, for instance, rose by one per cent between November and December and 2.54 per cent since 2017.

Transport, fuel, electricity and housing recorded a significantly higher rate of between 13.47 and 14.34 per cent.

At 70 per cent, charcoal experienced the highest inflation rate among the commodities surveyed. In 2017, for instance, a 4kg tin of charcoal retailed at Sh83 but shot to Sh141 at the end of December.

This steep rise in the price of charcoal, hitherto a major source of fuel to many low-scale Kenyan households, was as a result of the government’s ban on logging in February last year as a measure to protect forests and water towers.

Perhaps the biggest reprieve for Kenyans in 2018 was the dramatic fall in the price of maize flour, owing to wide-ranging interventions by the government aimed at cushioning poor households from high prices of the main staple.

From Sh101 in December 2017 down to Sh86 in December 2018, the price of sifted maize meal dropped by an incredible 15 per cent. Wheat flour also fell by eight per cent to sell at Sh122, down from Sh135 in 2017. Electricity cost remains a burden to most homes.

34 TIMES MORE

In 2018, the price of 50kwh rose steadily to Sh757 from Sh649 in 2017 — a 16 per cent rise.

Inflation of vegetable prices, however, remained relatively low. Only capsicums (pili pili hoho) and carrots, retailing Sh125 and Sh61 respectively last month, rose by more than 10 per cent.

A kilo of cabbage closed the year at Sh38, a Sh4 increase from the same period in 2017. Beef prices rose marginally from about Sh428 a year earlier to retail at Sh447 by last month.

House rent remained virtually unchanged between December 2017 and December 2018, with a single room going for Sh4,400 compared to Sh4,200 the year before.

Traditionally, the cost of fuel drives inflation by raising prices of most commodities. At the end of 2018, the price of a litre of diesel and kerosene had risen by double figures. This forced Kenyan households to pay Sh34 more for a litre of kerosene at Sh106 up from Sh72 in 2017, or a 46 per cent increase.

Diesel, mainly used in transport and for industrial purposes, sold at Sh111 up from Sh92 the year before, representing a 21 per cent upsurge. The surges in the cost of kerosene and diesel also reflected the controversial introduction of VAT on petroleum prices, which was reduced from 16 per cent to eight per cent after President Kenyatta’s intervention.

ALCOHOL

Shockingly, the cost of return tickets for domestic flights shot by 7.44 per cent from Sh19,700 in November to Sh21,230 in December 2018. This rate sharply contrasted the cost of return tickets for international flights which rose by a paltry 0.63 per cent from Sh119,000 in November to Sh120546 in December.

While inflation for international flights for the whole year was at 8.92 per cent, that for domestic flights was more than two times higher at 18.43 per cent.

Economic analysts attribute the scenario to increasing demand for air transport locally for business people and tourists. Lovers of alcoholic beverages had to part with Sh170 to buy a 500ml bottle of beer in December 2018 compared to Sh160 a year ago, representing a 8.19 per cent increase rate.

KNBS conducted a survey by collecting data from 25 selected retail outlets in Nairobi and in 13 other major towns in Kenya to compile these statistics.