Inflation soars to new high in April, eats into home budgets

The prices of essential commodities such as flour, fuel, cooking oil, and gas have surged by at least 25 per cent over the past year squeezing household budgets on the back of reduced salaries during the pandemic.

Kenya National Bureau of Statistics (KNBS) data shows inflation hit 6.47 per cent in April 2022, the highest in seven months since 6.91 per cent in September 2021, as a global spike in crude oil prices collided with strong demand during post lockdown economic activities.

This saw a litre of petrol and diesel averaging Sh145 and Sh126 respectively in April, compared to Sh107 and Sh97 per litre respectively in January 2021.

The price of cooking oil has increased by 35 per cent to Sh352 per litre up from Sh227 per litre in the first quarter of 2021.

Increase in prices

KNBS estimates that wheat flour prices increased from Sh128 per 2-kilogramme packet in April 2021, to Sh161 in April 2022, a 24.72 per cent increase. Last month, refilling 13-kilogramme gas averaged at Sh2,866, 38 per cent up from Sh2,074 a year back.

“The rise in inflation was mainly due to an increase in prices of commodities under; food and non-alcoholic beverages (12.15 per cent); furnishings, household equipment and routine household maintenance (7.15 per cent),” KNBS director general Macdonald Obudho in the April monthly inflation report.

Others are transport (6.88 per cent) and housing, water, electricity, gas and other fuels (5.47 per cent). Consumer Price Index (CPI), which measures the price change percentage of a basket of basic commodities consumed, increased by 1.69 per cent from an index of 120.139 in March 2022 to 122.173 in April 2022.

Over the same period, Food and Non-Alcoholic Beverages Index increased by 3.03 per cent. “Prices of food items in April 2022 were relatively high compared with prices of food items recorded in April 2021,” the statement read in part.

Prices of potatoes, fresh packeted cow milk and wheat flour-white increased by 10.18, 6.29 and 6.12 per cent in April 2022, respectively. But the news was not uniformly bad as sugar prices cooled off by 1.12 per cent to 130 per kilo. Housing, Water, Electricity, Gas and Other Fuels’ Index, increased by 0.71 per cent.

Furnishings, Household Equipment and Routine Household Equipment Index, increased by 0.72 per cent between March 2022 and April 2022. This was due to an increase in the prices of laundry/bar soap and detergents.

The price pressures have been painful for households, especially low-income earners who devote a big share of their budgets to basic items amid pay cuts and heightened taxes. Employers reckon that it will take longer for the companies to return to pre-Covid salaries as high production costs due to global uncertainties and high tax regime dim such hopes.

The federation of Kenya Employers (FKE) has appealed to the government to soften the tax regime and revise tax brackets for low-income earners, citing an unsustainable wage bill with the current workforce.

Low-income earners

“High cost of fuel, disruptions on the supply chain of essential commodities, and unfavourable tax policy need to be looked at,” FKE Chief executive Jacqueline Mugo said during the Labour Day celebration on Sunday. To cushion low-income earners,

President Uhuru Kenyatta announced a 12 per cent minimum wage increment, ending a four-year freeze in pay hikes since the last review in 2018 even as FKE argued that a reduction of income tax would have offered the much-needed reprieve.