To provide more clarity to Kenyans and companies on changes in prices of necessary commodities, the Kenya National Bureau of Statistics (KNBS) has unveiled a new inflation tracking framework.
In collaboration with the Central Bank of Kenya, KNBS launched a new framework to track the country's inflation. Contrary to the previous framework where Kenya's inflation rate was primarily calculated using the Consumer Price Index (CPI), inflation calculation will now incorporate core and non-core inflation metrics.
Starting in February 2025, KNBS will begin publishing core inflation data to help monetary authorities to better predict the impact of their interest rate decisions on the economy.
Core inflation, which excludes volatile items such as food and energy prices, reflects the underlying inflation trend, while non-core inflation considers all components, including the often fluctuating costs of essential commodities.
The government’s focus on these measures aims to ensure a more subtle understanding of inflation and its drivers.
While unveiling its inaugural report on Core and Non-Core Inflation Measures on Tuesday, January 21, KNBS Director-General Dr Macdonald Obudho revealed that this is a new move aimed at creating a more stable economic environment, which can benefit everyone from individual consumers to large businesses.
On his part, PS for National Planning James Muhati revealed that the move is an important journey for Kenya highlighting that unbounding the CPI into core and non-core categories fosters greater transparency and efficiency in Kenya's economic environment.
“This report marks a critical step in our journey toward improving economic decision-making. By distinguishing between core and non-core inflation, we are equipping policymakers and stakeholders with the tools to address inflationary pressures effectively,” PS Muhati said.
Currently, the CPI tracks 330 items, but under the new framework, 55 items are being dropped reducing the number of items in the basket to 255.
Among the items that were previously classified as having volatile prices that have been reclassified are maize flour, matatu fares, omena, and local travels.
"We are still looking at inflation of all these items, nothing is being lost, the main change is in refinement where we have a much better definition of core inflation which is much less volatile and which responds to more trip policy compared to what we had before," Kamau Thugge explained.
According to KNBS, this move is aimed at aligning with global standards and East African Community guidelines.
The new calculation methods will however not affect or grow inflation or interest rates.
