Food prices increase inflation

Food prices slightly increased month-to-month inflation in the country in the month of December 2015, contributed by heavy rains which reduced yields.

Central Bank of Kenya (CBK) in a statement said

Month-on-month overall inflation was 8.0 percent in December 2015, up from 7.3 percent in November, and above the 7.5 percent upper bound of the Government’s target range.

The main food items which contributed to this increase were Irish potatoes, tomatoes, kales (sukuma wiki), carrots, cabbages, onions, beef with bones, and avocados. These items contributed 2.3 percentage points to overall inflation and 6.3 percentage points to food inflation in December 2015.

The bank however expects that since many of these items are seasonal and fast-growing, their impact on inflation is expected to dissipate by April.

El-Nino rains that have affected most parts of the country, especially food growing areas has meant that the crops are either not harvested in expected quantities or transporting them from the farms to market becomes a challenge.

During the same period, oil prices, which contribute to the cost of transportation of goods from farms to markets have remained stable. An increase in this would mean an increase in the cost of the food prices as farmers seek to extend their increased costs to consumers. But some transport costs, for farms in areas with poor road network have slightly increased the cost due to difficulty in getting the crops to the market.


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