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Kenya Inflation August 2023

Kenya: Inflation drops to lowest level since April 2022 in August

Inflation dropped to 6.7% in August (July: 7.3%), the lowest level since April 2022. The print was below the expectations of market analysts and was within the Bank’s target band of 2.5–7.5% for the second consecutive month. The lower figure was largely due to slower growth in prices for food and non-alcoholic beverages, as well as a moderation in price growth for housing and utilities. Meanwhile, an increase in fuel subsidies from mid-August helped contain transport price pressures. The subsidy, set to last until 15 September, was introduced in response to public discontent sparked by recent tax hikes and subsidy cuts.

Meanwhile, annual average inflation edged down to 8.5% in August (July: 8.7%).

Lastly, consumer prices decreased 0.10% in August over the previous month, compared to July’s 0.10% rise.

Inflation should decrease from current levels in H2 2023 on average, likely due to the lagged impact of monetary tightening. Nevertheless, the persistent depreciation of the currency, coupled with recent surges in oil prices, rising electricity costs, and the introduction of new taxes in Q3, will continue to drive price pressures. A reversal of some of the tax proposals due to rising social tensions is a downside risk.

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