Inflation rate declines marginally in December but food prices remain high

By Today Financial News Reporter

The overall inflation rate has declined marginally from 19.72 per cent in November to 18.93 per cent in December mainly due to reduced cost of electricity and petroleum products.Food prices have remained high despite increased supply

However contrary to expectations, food and non alcoholic drinks’ index went up by 0.78 per cent between November and December 2011 despite increased food supply due to on-going rains.

According to the Kenya National Bureau of Statistics (KNBS) prices of beef with bones, bread, tomatoes, onions and chicken went up by 2.77, 1.82, 2.30, 4.54 and 3.14 per cent, respectively, between the two months.

On the other hand, the prices of sugar, mangoes, maize flour, maize grain and rice

went down by 3.44, 7.11, 1.34, 1.97 and 1.23 per cent, respectively, over the same period.

“Housing, water, electricity, Gas and Other fuels’ index went up by 0.62 per cent between November and December 2011,” says the Bureau.

“Like in the case of the food index, this small increase was also a net effect of both rises and falls in the prices of products categorized in this division.”

It said as in the previous months, the cost of several house rents and cooking fuels including charcoal, firewood, and gas continued to increase.

However, electricity and kerosene costs decreased by 9.90 and 4.32 per cent, respectively, during the same period.

“Indeed, as a result of reduced fuel and forex adjustment charges, the cost of consuming 50 units of electricity for example went down from Sh819 in November to Sh736 in December 2011.

“The transport index likewise, increased by 1.45 per cent between November and December 2011 as a result of rises in matatu, bus and taxi fares despite decreases in the cost of petrol and diesel.”