Kenya's inflation reached a 27-month peak in May 2022, climbing to 7.1% from 6.5% in April, according to the Kenya National Bureau of Statistics (KNBS). This marked the highest increase since February 2020 and raised concerns about breaching the government's 2.5-7.5% target range, a threshold last exceeded in August 2017 when inflation hit 8.04%.
The surge was fueled by sharp price increases across essential goods. Cooking oil prices jumped 47.09% year-on-year to Sh370.71 per litre, while wheat flour and maize flour rose 28.45% and 23.8%, respectively. Diesel and petrol costs also surged by 21.49% and 18.65%, respectively, exacerbating household financial strain.
Real wages remained negative at -3.83% in 2021, prompting households to cut non-essential spending. The Central Bank of Kenya (CBK) raised its benchmark rate to 7.5% to address inflation, acknowledging monetary policy's limited effectiveness against supply-side pressures. CBK Governor Patrick Njoroge warned of a "clear and present danger" of inflation surpassing the 7.5% ceiling, citing global supply chain disruptions and rising commodity costs.
Private sector activity contracted in April, with the S&P Global Kenya PMI dropping to 49.5. Analysts linked the decline to reduced consumer demand amid soaring food and fuel costs. Global factors, including a 27.8% rise in edible oil prices since January 2022, further pressured local markets, according to the UN Food and Agriculture Organisation.
KNBS managing director Macdonald Obudho attributed the inflation spike to double-digit increases in food, transport, and housing costs between May 2021 and May 2022. While the CBK emphasized that monetary policy could only address secondary inflation effects, officials noted that seasonal rains might eventually ease price pressures on staple crops.
