Kenya: Inflation accelerates in September
Latest reading: Consumer prices increased 4.6% in annual terms in September, following a 4.5% increase in the prior month. Inflation accelerated for the third consecutive month in September and was the joint-highest print since May 2024, though still remained within the Central Bank’s 2.5%–7.5% target range.
Relative to the prior month’s data, there were higher price pressures for food and non-alcoholic beverages (+8.4% on a year-on-year basis vs +8.3% in August) and housing, water, electricity, gas and other fuels (+1.4% vs +0.8% in August). In contrast, price pressures reduced for transportation (+4.0% vs +4.4% in August). Finally, the change in clothing prices was the same as in the prior month (+3.3% in September and August).
Lastly, consumer prices rose 0.24% in September in month-on-month terms, following a 0.32% rise in the prior month.
Outlook: Our Consensus is for average inflation to increase from Q3’s average in Q4, then tick down in Q1 2026 before gradually rising through Q4 2026.
For 2025 as a whole, inflation should edge down from 2024’s level due to lower global oil prices. In contrast, in 2026, inflation should reach a three-year-high, fueled by stronger domestic demand, previous interest rate cuts and a weaker currency vs the USD. Still, average inflation should remain well within the Central Bank’s 2.5%–7.5% target range during our forecast horizon through 2030.
Upside risks to the price outlook stem from a weaker-than-expected shilling boosting import inflation.