Kenyans choke under rising cost of basic goods, services

Over the last 12 months, Kelvin Kabui has helplessly watched as his ability to buy basic commodities dwindled on the back of rising costs.

But life has been particularly tough for the Kangemi resident over the last two months since he received his last pay cheque after his employer closed shop, citing ravages of Covid-19.

“I no longer buy things that I can do without, which enables me to save little cash to buy food and other urgent needs. But this is still difficult to achieve because prices of most goods have gone up,” says the 25-year-old IT graduate.

Mr Kabui’s struggles mirror those of millions of Kenyans who are heaving under the burden of high cost of living in a year marked with massive job losses and reduced salaries.

Data from the Kenya National Bureau of Statistics (KNBS) paints a vivid picture of the pain Kenyan consumers have endured over the 12 months, with the stagnant and falling incomes struggling to keep pace with the rising prices of goods and services.

The inflation cuts across all sectors of the economy and is forcing Kenyans to tighten their spending and cut on luxuries to remain afloat.

Between June 2020 and June this year, for every Sh100 they spent, consumers paid Sh8 more to buy food and beverages, Sh14 more on transport, Sh4 more on health services, hotels and accommodation, electricity, water, fuel and housing, and Sh3 on personal care products.

“The overall year on year inflation rate as measured by the Consumer Price Index (CPI) was 6.32 per cent in June 2021,” KNBS says in its report.

“This was mainly driven by rise in prices for commodities under food and non-alcoholic beverages (8.46 per cent); housing, water, electricity, gas and other fuels (4.25 per cent); and transport (14.71 per cent) between June 2020 and June 2021.”

Hurting poor Kenyans

The prices shot up following the end of government Covid-19 tax reliefs, introduction of new taxes in the 2021/22 budget and global trends that affect oil prices.

In January, the National Treasury reinstated 16 per cent Value Added Tax (VAT) on vatable commodities from 14 per cent, exposing and hurting poor Kenyans who had been cushioned by the pandemic relief.

Processed milk and cooking oil are some of the products whose prices rose following the reinstatement of the full tax. 

In the budget read in June, the government also introduced new taxes on basic commodities such as cooking gas, further squeezing the budgets of many households.

To break down the data, Kenyans paid Sh55 last month for a kilo of sukumawiki, up from Sh53 in the same month last year, Sh227 for half a kilo of cooking fat from Sh213 in June last year, and Sh281 from Sh258 for a kilo of matumbo over the same period.

Consumers also paid Sh63 for a kilo of spinach up from Sh60 last year, Sh70 for the same quantity of water melons from Sh64, and Sh472 for a kilo of beef, up from the Sh436 it cost in June last year.

Meanwhile, a kilo of tomatoes, which cost Sh101 in June last year, rose to Sh106 last month, the same quantity of Irish potatoes sold at Sh69, up from Sh68 last year, while onions became the sole basic commodity factored in inflation indices whose price dropped over the period to cost Sh110 per kilo, down from Sh127 last year.

On the other hand, a small household that uses 50 units of electricity paid Sh116 more for this quantity last month at Sh884, up from Sh768 last year, while a larger household that uses 200 units of electricity a month paid Sh4,940, which is Sh411 more than the Sh4,529 they paid in a similar period last year.

Stable food prices

“I am not sure when I will get my next pay cheque. This is why I am afraid that with the recent new taxes that have also been introduced by the government, things will only get worse especially for people like me who do not have a stable source of income,” Mr Kabui said. 

The cost of travelling and ferrying goods also shot up last month after petrol prices rose to Sh127 a litre from Sh90 in June last year.

And the pain on the road extends to people’s shelters because, on average, tenants renting a single room paid Sh3,719 rent last month, up from Sh3,614 in the same period last year after landlords raised rental prices.

Ken Gichinga, the chief economist at Mentoria Economics, says Kenya must cut its reliance on imported food to alleviate imported inflation pushed by high global prices.

Despite enhancement of food security being among the government’s Big Four Agenda, Mr Gichinga notes, the vote head was allocated just Sh60 billion in the current financial, which is less than two per cent of the budget — way below the 10 per cent advocated by the Malabo Declaration, of which Kenya is a signatory.

“Kenya imports a lot of its food products, which means the prices are largely set by global demand and supply of the foods,” Mr Gichinga said.

“This means that to achieve stable food prices, agriculture must be funded so that more food can be grown locally.”

The economist reckoned that reliance on imported fuel, which weighs heavily on inflation, also contributes heavily on the rising cost of goods as higher fuel costs increase transportation costs.

“There is an abundance of cheap renewable energy sources like geothermal, wind and solar locally, which will reduce dependence on imported fuel if tapped,” he said.

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