Kenya’s inflation rate has increased steadily since October 2024, reaching 3.5% in February 2025. The Central Bank has kept inflation below 5% since June 2024, a noteworthy achievement considering the peak of 9.2% in 2023. Food prices are rising, while a recent interest rate cut aims to encourage lending and economic activity amid these inflationary pressures.
Kenya’s inflation has experienced a steady increase since October 2024, with the rate climbing to 3.5% in February 2025, up from 3.3% in January of the same year. Despite this rise, the country has successfully maintained an inflation rate below the 5% threshold since June 2024, especially noteworthy considering an all-time high of 9.2% recorded in 2023. The recent upward trend in inflation signals a concerning trajectory, highlighting ongoing economic pressures on Kenyan consumers.
The inflation rate reflects broader economic conditions, with a reported decrease from 4.4% in August to 3.6% in September 2024, followed by a lower consumer price index of 2.7% in October. However, following this decrease, the inflation rate has consistently risen, culminating in the reported 3.5% in February. This trend was confirmed by recent communications from the Kenyan National Bureau of Statistics reported on Bloomberg.
Core inflation, which excludes fluctuating energy prices and agricultural staples, indicates weak demand currently affecting the market. Last year, in February, Kenya experienced its lowest inflation rate in 23 months at 6.3%, followed by further declines to 5.7% in March and down to 5.0% in April. The stability of being below 5% since June showcases progress for the Central Bank following last year’s high inflation rates.
In addition to managing inflation, Kenya’s central bank further decreased its primary interest rate to 10.75% as of February 5, encouraging lending and economic growth. February figures demonstrated a 6.4% rise in food and non-alcoholic drink prices, which constitute a significant part of the inflation basket. Meanwhile, transport costs remained stable, reflecting a balance in fuel price adjustments.
Notably, decreasing global fuel prices will likely benefit Kenya, which relies heavily on imported refined petroleum products and may subsequently lower energy prices domestically. Reports indicate housing and utility costs also experienced a decline of 0.8% in February. Despite fluctuations in inflation rates observed throughout late 2024, the central bank’s proactive measures suggest a commitment to stabilize the economic landscape.
In summary, Kenya’s inflation rate has shown a troubling upward trend since October 2024, culminating at 3.5% in February 2025, while the core inflation points to weak demand within the economy. However, effective measures by the central bank have successfully kept inflation below 5%, despite challenges amidst fluctuating global prices. The situation demonstrates the ongoing efforts required to manage inflation and foster economic growth in Kenya.
Original Source: africa.businessinsider.com
