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Kenya Inflation Eases for Third Month on Slower Food-Price Growth

(Bloomberg) -- Kenya’s inflation rate fell for a third consecutive month in August to a 16-month low as food costs rose at a slower pace and gasoline prices remained unchanged.

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Consumer prices rose an annual 6.7%, the slowest rate in 16 months, compared with 7.3% in July, the Nairobi-based Kenya National Bureau of Statistics said in a statement on Thursday. The median estimate of four economists in a Bloomberg survey was 7.2%.

“This is on the back of easing food prices following improved harvests across the country,” said Ronny Chokaa, an analyst at Nairobi-based Genghis Capital. The decision by the government to tap the Fuel Stabilization Fund to stabilize pump prices also helped ease price pressures, he said.

The food index, which accounts for a third of the inflation basket, rose an annual 7.5% in August, while the transport index increased 13.1% from a year ago as the price of gasoline remained unchanged at 194.68 shillings ($1.34) per liter.

“The inflation outlook over the coming month remains largely on the upside,” Chokaa said. “Firstly, we know that OPEC nations led by Saudi Arabia have opted to cut down oil supply for the remainder of the year. Secondly, there is the aspect of the weakening shilling, which compounds the costs of procuring oil imports.”

Increased taxes that are due to come into effect from Sept. 1 will add to inflationary pressures. They include a 3% digital assets tax, a 7.5% levy on imported iron, steel and clinker, and a 10% levy on imported paper, sacks and bags.

--With assistance from Simbarashe Gumbo.

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