The Consumer Price Index (CPI) data for Kenya revealed a decrease in the monthly inflation rate to 7.3% in July 2023, 0.6% points down from 7.9% recorded in June 2023. This marks the second consecutive decline since June and the lowest level recorded in a year since May 2022, when it was 7.9%.
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The Kenya National Bureau of Statistics (KNBS) released figures indicating that during July, Kenyan households experienced a decrease in the prices of key food items such as Irish Potatoes, Tomatoes, Cowpeas, Carrots, Oranges, Peas, Spinach, Beans, Wheat flour, Fresh flavoured packeted cow milk, Cooking gas/LPG, and Electricity.
The most substantial price reduction in July was observed in 1kg of Irish potatoes, which dropped by 12.2%, from Kshs 101.41 in June to Kshs 89.07 per kilo in July. However, during the same period, transport costs surged due to increased diesel and petrol prices. This followed the Energy & Petroleum Regulatory Authority’s (EPRA) adjustment of fuel pump prices after the Value Added Tax (VAT) on fuel products was raised from 8.0% to 16.0% in the legally embattled Finance Act 2023, currently in the Supreme Court awaiting judgement on its operationalisation by the government.
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The July 2023 inflation rate has fallen below the Central Bank of Kenya’s (CBK) target range of 2.5%-7.5%, a significant development after several months.
Despite the CBK’s implementation of a tighter monetary policy stance following the pronunciation of the national budget for the Finance Year 2023/2024, the effects are gradually permeating the economy.
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