Kenya sets inflation rate at 5pc for new fiscal year
Kenya has set an inflation target at 5 per cent for the fiscal year 2023/2024 to sustain macroeconomic stability.
The target would have a flexible margin of 2.5 per cent, said Njuguna Ndung’u, cabinet secretary for the National Treasury and Economic Planning, in a statement released.
“The flexible margin on either side of the inflation target is to cater for effects of external shocks such as adverse effects of the Ukraine-Russia conflict and other global disruptions on the Kenyan economy,” Ndung’u said, adding that the central bank is expected to achieve the target.
To contain rising inflation, the Central Bank of Kenya on June 27 raised the benchmark lending rate by one per cent to 10.5 per cent, the highest raise since 2018. The monetary policy, according to Ndung’u, coupled with improved agricultural productivity and increased importation of food items is expected to help lower the country’s inflation to the targeted level.
Kenya’s inflation dropped to 7.9 per cent in June, but it was still above the government’s target of 7.5 per cent.
Food prices in the country have continued to put households under pressure and raised the cost of living.
According to Kenya National Bureau of Statistics (KNBS) data, the price changes in food, energy, and transport, which cover about 57 per cent of household budgets, were major contributors to the inflation levels.
The high inflation slowed down the country’s economic growth in the first quarter to 5.3 per cent, down from 6.2 per cent in the same period in 2022. “Maintaining inflation at the targeted rate will help preserve macroeconomic stability and reduce undesirable fluctuations in economic performance,” Ndung’u said.
