Inflation rate drops to 9.1% on lower food prices
Decrease in food prices saw inflation in Kenya drop to 9.1 percent in December 2022, down from 9.5 percent in November, the latest report from the Monetary Policy Committee (MPC) meeting shows.
The MPC met on January 30, 2023, to discuss the recent developments in the Kenyan economy, including the decreased inflation rate.
MPC said food inflation declined to 13.8 percent in December, driven by a decrease in prices of maize and milk products due to improved supply, as well as a decrease in the prices of edible oils and wheat products resulting from lower global commodity prices. Fuel inflation declined to 12.7 percent, influenced by lower international oil prices.
“Overall inflation is expected to decline in the near term, also supported by the recently announced Government measures to allow duty-free imports of key food items particularly maize, rice and sugar,” MPC Chairman Patrick Njoroge said in a press release.
MPC said the outlook for global growth has improved, leading to a decrease in inflationary pressures, although geopolitical tensions and the monetary policy response in advanced economies pose a risk to the economic outlook.
The Kenyan economy recorded strong growth in 2022, with real GDP growing by 5.6 percent and the services sector expected to remain resilient in 2023. The surveys conducted ahead of the MPC meeting showed sustained optimism about business activity and economic growth prospects, while food prices are expected to decline or remain unchanged in February 2023.
The goods exports sector also remained strong, growing by 10.9 percent in 2022, while imports increased by 5.8 percent. The current account deficit is estimated at 4.9 percent of GDP in 2022 and is projected to reach 5.4 percent of GDP in 2023.
MPC added that the banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios. The performance of the banking sector was supported by a focus on customer-centricity and the adoption of technology and innovation.