Investment firm expects January inflation rate to stay within 7.5pc range
By Noel.Wandera, January 31, 2022
PROJECTIONS: Financial analysts have projected year-on-year inflation for January to fall within the 5.6 and 6 percentage range, on the back of stable fuel and food prices.
The projection by Cytonn Investment is within the government’s range of 2.5 per cent to 7.5 per cent, though the investment firm warns that the projections could be upset by a widening trade deficit, as global fuel prices continue to rise due to supply bottlenecks.
Fuel prices for the period January 15 to February 14, 2022, have remained unchanged at Sh129.7 per litre for Super Petrol, Sh110.6 per litre for Diesel and Sh103.5 per litre for Kerosene.
So because for the umpteenth time, the government has maintained low fuel prices through its fuel subsidy facility which absorbs high margins by oil majors and spares consumers the high cost of the commodity.
Last week, crude oil global prices neared the $90 a barrel mark for the first time since 2014 nudged by the continuing political tensions between Russia and Ukraine, the latter supported by the West which can easily escalate into war.
“With fuel being a major contributor to Kenya’s headline inflation, maintaining constant fuel prices is expected to have a muted impact on the inflation basket,” said Cytonn in its weekly report yesterday.
The report says food prices remained relatively stable during the month as a result of improvement in agricultural output due to the ongoing rains in parts of the country.
Cost of living
Other inflation drivers, Cytonn said remained relatively unchanged. It identified some of the factors that have kept the cost of living bearable as the cost of electricity, stability in the fixed income market and the expected support from the International Monetary Fund and World Bank.
The foreign exchange fluctuation tariff for electricity usage has remained relatively unchanged at Sh73.1 cents per Kilowatt hour (KWh) in December, from Sh73 cents per Kilowatt hour (KWh) in November 2021, despite the fuel cost charge on electricity bills increasing by 10 per cent to Sh4.6 KWh in December 2021 from Sh4.2 KWh in November same year.