Kenya inflation rises to 6.8% in September

Inflation in Kenya rose to 6.8% in September 2023 from 6.7% in August, driven by sharp increases in fuel prices. The cost of electricity has also surged by 67% in the last nine months due to higher fuel costs, currency depreciation, and the review of electricity tariffs. Rufas Kamau, Lead Market Analyst at EGM Securities, discussed these concerning trends with CNBC Africa. The inflation surge is primarily fueled by the global increase in oil prices, which have risen from around $70 to over $92 per barrel in recent months. Kenya, being a major oil importer, is directly impacted by these price spikes, leading to higher transportation and manufacturing costs that are passed on to consumers. The removal of subsidies on essential goods like food, oil, and electricity, as part of IMF's Structural Adjustment Programme, has further exacerbated the situation. Despite the slight decrease in inflation earlier in the year, consumer spending patterns have shifted due to rising fuel and electricity expenses. The continuous increase in consumer prices coupled with stagnant incomes has placed a heavy burden on the average Kenyan. The Central Bank of Kenya faces the challenge of balancing the need for interest rate adjustments to control inflation while avoiding additional strain on businesses and individuals grappling with debt. Analysts predict that the Central Bank is likely to maintain current interest rates to nurture economic stability. However, Kamau suggests that more needs to be done to stimulate production and support key economic objectives in the coming year.