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Rising food, fuel prices push June inflation rate to 5.7pc
Rising food, fuel prices push June inflation rate to 5.7pc
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The Kenya National Bureau of Statistics (KNBS) has quoted the end month inflation rate at 5.7 percent to indicate a 0.2 percent upward adjustment to commodity prices during the month of June.
The marginal surge in the consumer price index (CPI) is attributable to a continued slip of both food and fuel prices during the month as the food-fuel inflation component took a turn for the worse in spite of a notable improvement to weather conditions.
While the easing conditions and improved agricultural output held back growth for some food commodities, the pricing of essentials such as maize grain, sifted flour and beans continued to rise unabated leading to the uptick in the CPI.
“Prices of spinach, sukumawiki, and tomatoes recorded decreases. However, prices of some other foodstuffs like beans, maize grain, beans, green grams and sifted maize flour increased during the same month, KNBS inflation statistical release read in part.
On petroleum, the prices for all commodities but kerosene were on the increase with the average petrol and diesel prices per liter rising to Ksh 115.80 and Ksh.105.57 respectively.
While the inflation rate has kept within the historical target range of 2.5 to 7.5 percent for the umpteenth time, inflation jitters are expected to persist based on a combination of both internal and external factors.
Internally, the agricultural industry is for instance yet to get to grips with the effects of delayed rainfall at the start of the year, a factor further exacerbated by a looming grain shortage with the Ministry of Agriculture having disclosed of thinning grain reserves at its Strategic Food Reserve (SFR) stocks.
Externally, a downturn in global growth optimism under rising tensions including the US-China trade spate and a worsening diplomatic tone in the gulf has almost certainly assured of commodity volatility which would likely hit Kenya in the form of higher crude pricing in the international market.
The valuation of the Kenyan shilling also makes for an emerging area of concern, with the shilling having breached the Ksh.102 mark during the month against the US dollar under the cloud of elevated dollar demand by importers and high liquidity.
The shilling traded at an average high Ksh.102.29 on Thursday while the inter-bank rate, the primarily indicator to the amount of money in circulation hitting a low of 2.23 percent on the same day.
The Central Bank of Kenya (CBK) has however played down any fears to the perversion of the macroeconomic fundamentals backing its monetary policy intervention role to prop up the basics.
“We need to be more relaxed. We have more than enough fire power to deal with any volatility,” CBK Governor Patrick Njoroge told a news conference last week.
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Source: citizentv.co.ke
Kenyans are in for a challenging financial period as the Central Bank of Kenya (CBK) recently made its most substantial interest rate hike in 11 years.
The Monetary Policy Committee (MPC) increased the CBK rate from 10.5% to 12.5%, the highest since September 5, 2012, when it stood at 13%.
This move is the third rate hike this year and the swiftest since November 1, 2011, when the CBK surprised the market with a 5.5 percentage points rise from 11% to 16.5%. The decision aims to curb inflation and stabilize the depreciating shilling, but it comes at a cost for borrowers already grappling with elevated living costs and statutory deductions.
Commercial banks are expected to reprice loans upwards, compounding the financial strain on borrowers. The weighted average interest rates have already surged to 13.98% in September, the highest since May 2016.
This increase will likely impact customers who are currently paying rates above 18%, factoring in the risk of defaulting.
Bankers had advocated for maintaining the rate at 10.5%, but the MPC’s decision was driven by the need to control the weakening shilling, which has increased debt servicing costs and import expenses.
The CBK highlighted that exchange rate depreciation contributed about three percentage points to the 6.8% overall inflation in November.
However, this rate hike is raising concerns among banks about potential mass defaults. The banking sector has witnessed a steady rise in non-performing loans (NPLs), reaching Sh615.54 billion in September.
This increase, combined with a weakened shilling, poses challenges to the government’s plan to achieve a 5.4% budget deficit in the current financial year.
As the Central Bank grapples with economic stability, taxpayers are feeling the heat through elevated prices on imports like fuel, processed food, and raw materials, further exacerbating the economic challenges faced by Kenyans.
President Uhuru Kenyatta’s last budget will put his successor under pressure to raise Sh350.7 billion in fresh profit to apply his preferred systems, setting up Kenyans for advanced taxation and aggressive pursuit of duty cheats.
Treasury Cabinet Secretary Ukur Yatani will Thursday autumn reveal to MPs how he’ll fund the record Sh3.31 trillion budget for the time starting July in a ritual that will take place two months before due to the August 9 bean.
The front- runners in the 2022 presidential choices — opposition leader Raila Odinga and Deputy President William Ruto — have promised fresh social spending.
Formal sector workers, landlords, pots and ordinary consumers are headed for an anxious autumn as the Treasury targets Sh2.024 trillion in levies, a growth of20.9 percent on the current Sh1.67 trillion.
Judges anticipate the sharp growth in specific parts of the duty earnings to come with strong growth or advanced duty rates.
Top on the list of targeted profit sources is income duty, whose fresh profit is anticipated to rise by Sh179.4 billion to Sh997.3 billion, motioning a possible advertisement of new duty measures on workers’ hires and company earnings.
Mr Yatani also plans to collect Sh107.6 billion further from Handbasket to Sh548.7 billion and excise duty, targeting particulars like beer, cigarette and pop, which is projected to rise Sh37.6 billion to Sh297.2 billion.
Similar situations of profit growth are generally only possible in an terrain of robust profitable growth that increases the number of workers, yields advanced hires for those formerly working and raises commercial gains.
The volition is a rise in the duty rate.
The Kenyan frugality is on a recovery mode from Covid-19 profitable rigors, which started layoffs, pay cuts and business closures.
The Treasury had earlier blazoned a new crackdown on fat duty evaders as part of its budget for the time starting July, setting the stage for trip bans, means snap and deactivation of Particular Identification Figures ( Legs).
Duty experts said Mr Yatani will likely raid easy targets similar as alcohol consumers and smokers for further levies from beer, wines, spirits and cigarettes despite the goods being subordinated to advanced levies every October in line with average affectation for the antedating fiscal time.
Capital gains duty is a duty on the profit realised on the trade of an asset similar as trade of stocks, bonds, precious essence, real estate, and property.
The government is trying to raise finances for development systems to goad growth and produce jobs, but judges say duties similar as capital levies could discourage foreign investors.
Mr Kenyatta’s administration has made changes to the capital earnings duty during its near 10- time term after it was dropped in themid-1980s to attract foreign and original investment. In 2014, Mr Kenyatta inked into law a five percent capital earnings duty.
Experts also anticipate a clampdown on the fat duty cheats, high-net-worth professionals and dealers, to recover overdue levies in sweats to raise the public earnings.
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