Kenyans could soon have to dig deeper into their pockets for maize and wheat flour after a leading miller cautioned the public of a looming hike in prices due to increased production costs.
In a financial statement published on Thursday, the miller which processes popular maize and wheat brands indicated that the increase would stem from an increase in exchange rates.
While the miller noted that the Shilling had strengthened in recent days, there were still existing risks in the exchange rate owing to fluctuations.
The company expounded that the exchange rates are likely to impact the costs of imported raw materials and shipping.
As a result, production of the flours could rise and ultimately see the prices of the commonly used household items increase.
"The US dollar exchange rate and liquidity have shown improvement. However, should foreign currency exchange risk persist, it will potentially influence the costs of our imported raw materials and thus impact the overall cost of our products.
"Despite the challenges, the Group will capitalize on its strengths to drive performance enhancements across all operations," the miller cautioned.
Currently, a 2kg packet of maize flour retails between Ksh150 to Ksh200 depending on the brand.
On the other hand, a similar-sized packet of wheat flour ranges between Ksh180-Ksh200.
According to the milling company's projections, Kenyans will also spend more in hotels for various foods such as ugali, mandazi and chapati.
Exchange Rate
The Shilling has strengthened against the dollar in recent weeks.
Currently, the Dollar is trading at Ksh144, in comparison to an average of Ksh159 in January. However, the highest rate in January hit Ksh162.
The recent gains made by the Shilling have been attributed to the repayment of the USD2 billion Eurobond among other macro and micro economic factors.
"Data from the Central Bank of Kenya (CBK) confirms that the Infrastructure bond received total bids worth Ksh288 billion, and CBK accepted Ksh240.9 billion with Ksh218 billion in competitive bids.
"Expectedly, the infrastructure bond elicited considerable foreign investor appetite, leading to the shilling rally, especially on the back of the sovereign’s successful Eurobond issuance that beat back quite convincingly earlier difficult risk concerns," Kenya Bankers Association explained.
