On Friday, March 29, 2024, the Kenya Bureau of Statistics released a statement that the inflation rate decreased to 5.7% in March 2024, compared to 6.3% in February, as assessed by the Consumer Price Index (CPI).
Kenya’s transportation, housing and utilities, and food and beverage prices all increased between March 2023 and March 2024. However, in March, these costs fell slightly as the Kenyan shilling strengthened against the dollar. Currently trading at 1 dollar equals 132 Kenyan shillings.
Even while certain prices have decreased, the costs of moving commodities, house maintenance, and purchasing necessities remain relatively high. Over 57% of the weights in the 13 broad categories are accounted for by just three divisions: cost of moving products, home maintenance, and purchasing basics. So, despite some price drops, the general cost of living in Kenya remains rather high at this time.
According to the statement, the CPI and inflation are calculated using data from monthly retail pricing surveys that target a representative basket of household products and services. During the second and third weeks of each month, the data collection is carried out from a representative sample of outlets located in 50 data collection zones around the country.
To stabilize the shilling currency, the Central Bank of Kenya(CBK) announced an increase in the policy rate by 50 basis points on Tuesday, February 06, 2024. The shilling’s depreciation has affected debt payments, decreased foreign investment, and put pressure on prices. The policy rate was raised from 12.5% to 13%. The increase in the policy rate is providing the groundwork for expensive loans.
The CBK governor and chairman of the Monetary Policy Committee (MPC), Dr. Kamau Thugge, stated that the proposed action would ensure that inflationary expectations remain anchored, set inflation on a firm downward path towards the five percent midpoint of the target range, and address any remaining pressures on the exchange rate.
