Why Kenyans Will Continue to Pay More For Commodities Despite Inflation Drop

A new report shows that inflation in the country dropped from from 6.62 per cent in July to 5.84 per cent in August.

The Kenya National Bureau of Statistics (KNBS), said that Kenya's food and non-alcoholic drinks segment, decreased by 0.26 per cent between July and August.

According to the statistics, the cost of food dropped significantly, owing to the good weather experienced in the country recently.

Despite this, Kenyans will continue to pay more for gas, electricity and housing.

According to the report, the inflation on these goods rose by 0.76 per cent.

Part of the problem has been attributed to the weakening shilling.

Experts have expressed concerns that should the shilling continue to decline, Kenyans will have to face an increase in inflation.

On Monday the shilling was trading at 103.86 against the dollar.

 

Today's opening indicative rates; US Dollar - 103.86, STG Pound - 160.30, and Euro - 116.80

— Central Bank Kenya (@CbkKenya) August 31, 2015

 

The Kenyan shilling has been performing poorly against the dollar and other major world currencies for the last 3 months.

Appearing before the senate committee late last month,CBK Governor Patrick Njoroge, said factors such as weakening of earnings from traditional exports like tea, coffee and horticulture over the recent past had left the shilling exposed.

He added that the drop in tourism had also contributed to the fall in value of the shilling.

Njoroge, however, remained optimistic that the shilling would pick up, most especially, after the Global Entrepreneurship Summit in July.

Read: CBK Governor Expresses Optimism at Strengthening the Shilling

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