Kenya's inflation rate declined to 4.1% in February 2019, marking the lowest level in six months, according to analysts who attribute the drop to falling food prices for staples like maize, vegetables, and sugar.
While fuel prices have decreased in recent review cycles due to lower crude oil costs in late 2018, economists warn that rising global oil prices could push pump prices higher starting March 2019, creating inflationary pressure.
Commercial Bank of Africa (CBA) analysts stated that declining food prices and weak demand should offset fuel cost increases, keeping inflation on a downward trajectory. 'The anticipated rise in pump prices aligns with global oil trends but will be counterbalanced by stable food inflation and subdued core inflation,' the bank noted.
Food items account for 36% of Kenya's consumer price index, making them a critical factor in headline inflation. Citi economists echoed this view, predicting inflation will stay within the central bank's 2.5-7.5% target through 2019, barring a 2018 base effect that could temporarily boost prices late in the year.
David Cowan, Citi's chief Africa economist, highlighted that food inflation, typically above overall rates, has remained below the general inflation rate since mid-2018. 'Inflation is unlikely to rise soon, with a potential rebound to 5% levels by year-end due to the base effect,' he said.
