Kenya’s Inflation Rate Continues to Climb Amid Economic Concerns

Kenya’s inflation rate rose to 3.5% in February 2025, continuing an upward trend observed since November 2024. Despite challenges, the rate has remained below 5% since June, a significant feat compared to last year’s peak of 9.2%. Core inflation remains low at 2%, with ongoing concerns regarding food and transport pricing affecting overall inflation.

Kenya’s inflation rate has risen for the fourth consecutive time, indicating a troubling trend in economic stability. As of February 2025, the inflation rate increased to 3.5%, up from 3.3% in January. The nation has, however, managed to maintain an inflation rate below the critical 5% mark since June, a significant improvement considering the record high of 9.2% experienced in 2023.

Since the decline to 2.7% in October 2024, inflation has steadily escalated. In February, the consumer price index demonstrated a slight uptick in inflation from the previous month’s figure, evidencing a problematic reversal in trends. According to the Kenyan National Bureau of Statistics, which released this data in a communication to Bloomberg, this increase raises concerns about demand and economic conditions.

Core inflation, removing volatile sectors such as energy and food, recorded a modest 2% as weak demand persists. A year prior, inflation had reached a 23-month low of 6.3%. Following this, the inflation rate fell to 5.7% in March and stabilized at 5.0% through March and April.

The Central Bank of Kenya’s recent strategies have included reducing the main interest rate to 10.75% to stimulate lending and economic growth. Food and non-alcoholic beverage prices contributed substantially to inflation, rising from 6.1% to 6.4% month-over-month. Additionally, transport costs remained stable despite unchanged gasoline prices, aided by a drop in global fuel prices that may help ease overall energy costs.

Overall, while inflation had been on a steady downward trajectory for several months, the recent figures suggest a shift in this trend that needs attention. The Central Bank’s focus remains on proactive measures to ensure economic stability and production growth.

Kenya’s current inflation trajectory reflects an ongoing increase despite efforts to stabilize the economy. Key sectors contributing to inflation, including food and transport, underline the importance of strategic interventions. Continuous monitoring is essential to manage inflation effectively, especially following the previously achievable low rates. Proactive measures from the Central Bank highlight a commitment to addressing these recent economic challenges.

Original Source: africa.businessinsider.com