This archive report was first published on 4 September 2019.
Published on September 4, 2019, experts have cautioned that the recent decline in inflation may not be a guarantee against future price hikes.
According to economist Edward Kusewa, the effects of the delayed long-rains season may not have fully filtered through the economy, signaling the possibility of additional shocks in the short-run.
"Inflation shocks from earlier in the year are likely transferable into the latter parts. The damage from drought is already done in most parts of the country, and so, short-rains are in no way an indication of a bounce-back," he said.
Meanwhile, Research analyst Timothy Njagi from the Tegemeo Institute noted that optimal food production is no assurance of inflation suppression over time, citing past periods of bumper harvests, including 2018, which failed to hold back the rapid expansion in consumer prices.
"Inflation does not necessary follow the production cycle. Prices were consistently low in the first half of the year but we should expect a gradual rise into the first part of next year," reckoned Njagi.
Despite spikes to the inflation rate, consumer prices have consistently kept within the government-targeted band of between 2.5 and 7.5 percent, abiding by the National Treasury conditions for the execution of fiscal strategy.
The interest rate capping regime has played a significant role in muting the growth of consumer prices, although it was intended to ease credit access to the private sector.
Consumer demand and money in supply have been on the retreat since the implementation of the capping law in September 2016, providing an unprecedented check on the growth of consumer prices.
