CBK forecasts inflation will fall to target rate in months

What you need to know:

  • The CBK has a five per cent — subtract or add 2.5 percentage points — medium-term inflation target.
  • Kenya has been struggling to contain high inflation caused mostly by higher food prices, which are outside the monetary control.
  • Kenya’s inflation fell to 9.21 per cent year-on-year in June, from 11.70 per cent a month earlier. This is still above Treasury’s preferred upper limit of 7.5 per cent.

The Central Bank of Kenya (CBK) has forecast lower inflation in the next two months.

CBK Governor Patrick Njoroge said on Tuesday said inflation is likely to reduce to within the preferred range as food prices keep falling.

“We expect in the next two months inflation will continue to come down but within this quarter it will breach the 7.5 per cent mark,” Dr Njoroge said at a press briefing.

“As of now we are on a solid ground that this will be coming down into the target definitely in the next two months or so.”

The CBK has a five per cent — subtract or add 2.5 percentage points — medium-term inflation target.

Kenya has been struggling to contain high inflation caused mostly by higher food prices, which are outside the monetary control.

Kenya’s inflation fell to 9.21 per cent year-on-year in June, from 11.70 per cent a month earlier. This is still above Treasury’s preferred upper limit of 7.5 per cent.

“Non-food-non-fuel (NFNF) inflation has remained below 5 per cent over the last seven months, suggesting that demand pressures remain subdued,” CBK.

The Kenya National Bureau of Statistics (KNBS) partly attributed this to a drop in food prices after rains boosted supplies.