Stable agriculture, sound monetary policy interventions and reduced fuel prices that followed the government-to-government oil deal have eased the cost of living to the lowest level in 14 years.
Policy initiatives by the government have led to notable improvements in economic conditions, offering renewed optimism in key sectors.
Guided by policies targeting fiscal reforms, infrastructure growth and business incentives, the economic landscape has witnessed increased activity, with promising indicators across agriculture, technology and manufacturing.
National Treasury says it expects the trend to continue going forward, hoping to hit 2.5 per cent.
Cabinet Secretary John Mbadi requested ‘ a little patience’ as households start feeling the impact of the reduced inflation.
“I know many will say the inflation data does not reflect reality on the ground but we are getting there systematically. We now intend to put more focus in revitalising our manufacturing sector through various incentives to brew job creation and power local productivity,’’ he said.
“Cheaper food, jobs for our population and affordable credit to SMEs is our priority. This is being done through focused policies.”
Mbadi spoke at the State of Economy briefing yesterday.
After five years of persistent increases, inflation established a long-term upward trend by its peak of 9.59 per cent in October 2022. This trend pointed to structural issues rather than the normal, weather-driven seasonal variations.
In September 2022, Kenya’s inflation recorded the highest rate in recent times hitting 9.2 per cent year-on-year.
This was the highest rate since June 2017.
A two kg packet of maize flour that was retailing for Sh170 in September 2022 is now retailing for Sh127 in October according to figures released by Kenya National Bureau of Statistics.
Similarly, a two-kilogramme pack of sugar that retailed for Sh277 at the time is now going for an average of Sh255, while the pack of rice that was going for Sh534 has dropped marginally according to a spot-check by the Star.
Experts said the sustained upward trend of inflation meant it is outpacing the annual increments in a majority of Kenyan households.
As a result, real income - what your shilling can buy - had been declining. Between 2019 and 2023.
For Instance, a 2kg packet of Sugar, rice and maize flour cumulatively cost Sh980 in September 2022, but this year that has slightly dropped to Sh957.
Although inflation dropped to
2.7 per cent in October, the positive
effects on household finances may
take months to materialise.
