In Summary
  • Naturally, this means any change in airtime prices will have a direct impact on the cost of living.
  • Food is no longer the most important component of the new basket of goods after it came in fifth on the list.

Airtime has toppled rent as the top expenditure item in the basket of goods that determine the cost of living in Kenya.

To be classified among the top earners in Nairobi, one must be spending at least Sh184,395 per month.

In a report, whose results on the cost of living were released Tuesday, the Kenya National Bureau of Statistics (KNBS) has reviewed the weight in the new Consumer Price Index (CPI) basket of goods from 3.086 per cent to 5.496.

FOOD
Naturally, this means any change in airtime prices will have a direct impact on the cost of living. It’s also set to bring the centrality of communication in the day-to-day living of an ordinary Kenyan.

Food is no longer the most important component of the new basket of goods after it came in fifth on the list. However, if you add all the food items and non-alcoholic beverages, food is still the most important item.
Bus fare comes second (3.161), followed by house rent — for a single room — (2.849). Hotel and restaurant meals come in fourth (2.849) while beef with bones is fifth (2.805).
Other top 10 items are house rent (for a two-bedroom apartment), packeted fresh milk, beer (lagers and stouts), fresh unpacketed milk and white bread in that order.

Beer was never on the top 10 commodities in the basket and coming at number eight means Kenyans are now spending more on alcohol. KNBS notes that due to changes in lifestyle, consumer behaviour, tastes and preferences, some items that were initially in the basket were dropped.

These include the kerosene stove, radio or cassette or CD player and video cassette hire.

The new items included in the measure are TV subscription fees for private vendors such as DSTV, antennae (aerial), satellite or decoder charges, courier services, garbage and refuse collection, mobile money transfer and university boarding fees.

RETAIL PRICE

KNBS conducts a retail price survey every month, whose results are used to compile the Consumer Price Indices (CPI) and rates of inflation. These help to measure the cost of living in the country.

The CPI is mainly used as a determinant in supplier or debtor price variations, the employer or employee wage negotiations, indexation of pension benefits and as a major indicator of macroeconomic performance.

“The basket of goods and services used to compile CPI is regularly reviewed as a result of changes in household expenditure and consumption patterns,” KNBS Director-General Zachary Mwangi said in a statement.

The bureau initiated the CPI review in September 2015 after conducting the 2015/16 Kenya Integrated Household Survey.

“The revision has been guided by internationally accepted best practices as well as the Common Market for Eastern and Southern Africa (Comesa) and East Africa Community harmonised Consumer Price Index regulations,” said Mr Mwangi.

KNBS unveiled five stages it followed in the review, among them determination of baskets for the new CPI, in which a similarity analysis of counties in terms of household consumption patterns was conducted. Three income expenditure groups — each constituting a separate basket — were established in Nairobi and seven other regional baskets.

LABOUR REPORTS

The new baskets have 330 items compared to 234 in the previous ones. Other stages are sampling of towns and outlets, review of classification of individual consumption, use of technology in data capture and determination of weights.

KNBS was yesterday scheduled to release three new products. These are the new Consumer Price Index (CPI), the new Producer Price Index (PPI) and four quarterly labour reports.

The reports will analyse the population aged 15 to 64 for key labour indicators. “Topics covered include labour force participation, employment, unemployment, labour underutilisation and inactivity,” KNBS said in the statement.

In Nairobi, KNBS has now created three expenditure groups based on the Household Survey.

The Nairobi lower expenditure group has households spending Sh46,355 or less per month. The total expenditure for these households was 56.1 per cent of Nairobi expenditure. But it comprises 70.89 per cent of all households in Nairobi.

SH184 PER MONTH

The second category is the Nairobi middle expenditure group that has households spending between Sh46,358 up to, and including, Sh184,394 per month. This constitutes 25.58 per cent of all Nairobi households.

The third is the Nairobi upper expenditure group, which has households spending above Sh184,395 per month. This constitutes 3.53 per cent of all Nairobi households. But it represents 11.7 per cent of the total expenditure in Nairobi. KNBS has also rebased the PPI to reflect the current realities.

“Over time, the production patterns and the industrial structure has changed necessitating the need to rebase the index to reflect the current status. Reviewing the index is also in line with the internationally accepted best practices,” the bureau added.