Kenya’s inflation slowed in December to an average of 7.7% this year, the fastest pace since 2017 when a severe drought drove up food costs.
Consumer prices rose 9.1% from a year earlier, compared with 9.5% in November, the Nairobi-based Kenya National Bureau of Statistics said in an emailed statement on Friday. Prices rose 0.5% in the month, from 0.3% in November.
While average inflation for the year is above the central bank’s target range of 2.5% to 7.5%, the slowdown in price growth may provide room for its monetary policy committee to stand pat on interest rates at its first meeting of 2023 in January.
The Central Bank of Kenya has increased its key rate by a cumulative 175 basis points in 2022 in a bid to bring price growth back inside its target band by early next year. That’s less than 17 other African central banks, but the most in seven years for East Africa’s largest economy.
Inflation has been fanned by the nation’s worst drought in 40 years, a 9% slump in the local currency against the dollar and a surge in the prices of international commodities, such as wheat and gasoline, due to supply-chain disruptions and Russia’s war in Ukraine.
The main driver of December’s deceleration was slowing annual food and non-alcoholic drinks price growth — the largest component in the inflation basket — to 13.8% this month, compared with 15.4% in November. Furnishing and household equipment inflation cooled to 9.9% from 10.6% last month.
© 2022 Bloomberg L.P.
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