Kenya’s Inflation Continues Upward Trend Amid Economic Challenges

Kenya’s inflation rate rose to 3.5% in February 2025, increasing from 3.3% in January. This marks an ongoing trend since November, though inflation has generally remained below 5% since June 2024. The Central Bank has lowered interest rates for economic stimulation amid rising costs in food and transport.

Kenya’s inflation has seen a consistent upward trend for four consecutive months, with the latest rate recorded at 3.5% in February 2025, an increase from January’s 3.3%. This sustained rise began in November 2024, despite previously maintaining an inflation rate below 5% since June 2024. Notably, this follows a high of 9.2% recorded in 2023, marking a significant change in the country’s financial landscape.

In comparison to last August, Kenya’s inflation rate saw a drop from 4.4% to 3.6% in September, followed by a decline to 2.7% in October 2024. However, inflation began to climb again, reaching 3.5% in February. According to information from the Kenyan National Bureau of Statistics, shared with Bloomberg, overall demand appears weak, as indicated by a core inflation rate of 2% excluding energy and volatile agricultural products.

In February of the preceding year, inflation reached a two-year low at 6.3%. By March, it was recorded at 5.7%, and in April, it dropped further to 5.0%. Maintaining this level through May, inflation significantly decreased to 4.6% in June. These figures highlight Kenya’s success in keeping inflation below the target range set by the Central Bank, given the previous year’s peak.

Consequently, in February, the Central Bank lowered its main interest rate to 10.75% for the fourth consecutive meeting, aiming to foster lending and stimulate economic growth. Food and non-alcoholic beverage prices rose by 6.4% in February, whereas transport costs remained stable. Furthermore, the decline in global fuel prices may positively impact the country’s energy costs, with housing and utilities showing a decrease in February.

The trajectory of Kenya’s inflation rate from November to December indicates fluctuations, with increases noted from 2.7% to 2.8% in November, followed by a rise to 3% in December. This escalating pattern underscores the challenges faced in stabilizing inflation while pursuing economic recovery after previous record highs.

In summary, Kenya’s inflation is currently on the rise, reaching 3.5% in February 2025. While the country had previously maintained inflation lower than 5%, recent trends suggest emerging challenges. The Central Bank’s interest rate reduction aims to address these economic pressures, even as food, transportation, and utility costs fluctuate. Continued monitoring will be essential to gauge future economic stability and inflation trends.

Original Source: africa.businessinsider.com