CBK predicts drop in overall inflation in June despite increase in some staple food prices

KENYA- According to the recent Agriculture Sector Survey conducted by the Central Bank of Kenya, staple food items like white & brown bread, rice wheat floor and green maize will rise by an average of 20% in June due to the impact of floods on yields as overall inflation is expected to decline. 

The survey included 268 participants, including retailers, wholesalers, and farmers, as well as market analysts and economists. 

The survey predicts rice prices will increase by as much as 40% in June. The survey also predicted an increase in onion prices.  

The survey predicts slight drop in sugar prices as prices have progressively declined in the past few months and will most likely decline. Data from the Kenya National Bureau of Statistics (KNBS) showed a kilo of sugar dropped from KES 209.55 (US$1.62) in January to KES 144 (US$ 1.11) in June, caused primarily by a significant increase in production following a six-month ban on the harvest of immature canes.  

In contrast, as stakeholders expect supply to improve, the survey predicts a decline in prices of loose maize grain, loose maize flour, sifted maize flour, and fortified maize floor. 

“This expectation was informed by the presumption that market supply will continue to improve, supported by favorable weather conditions experienced in the country,” the CBK said in a statement. 

The CBK predicts food inflation to increase to 6.2% in June compared to 5.6% in April because of the reported increase in commodity prices caused by excess rainfall and flooding episodes. It also predicts overall inflation to drop to 5%, matching KNBS’ prediction of 5.1%, inspired by a 7.8% decline in fuel inflation in April and May. 

The CBK routinely conducts the survey to bring together information on expected and current developments in the agricultural sector and their associated impacts on the prices of food items to inform decisions on monetary policies. 

Although the surveys and prediction show signs of inflation decline, the current global economic climate and the co0ntroversial Finance Bill 2024 are still challenges that need to be overcome for inflation to stabilize. 

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