Kenya’s annual inflation rate eased further in May, declining to 3.8% from 4.1% in April, according to data released by the Kenya National Bureau of Statistics (KNBS) on Friday.
This marks the twelfth consecutive month that inflation has remained below the 5% midpoint of the Central Bank of Kenya’s (CBK) target range, reinforcing expectations of another rate cut during the upcoming monetary policy meeting on June 10.
The continued moderation in consumer prices has been attributed to a firm local currency, restrained domestic demand, and easing global oil prices.
The decline also follows government intervention through the release of corn from strategic grain reserves to stabilize food prices, particularly of staple commodities such as maize flour and sugar.
The latest KNBS data shows that prices of food and non-alcoholic beverages — which account for over 32% of the inflation basket — rose by 6.3% year-on-year in May, down from 7.1% in April.
This decline reflects improved food supply following the government’s release of maize stocks aimed at curbing the rising cost of living.
Core inflation, which excludes volatile food and energy prices, edged higher to 2.8% in May from 2.5% a month earlier, suggesting contained underlying inflationary pressures.
The transport index remained unchanged at 2.3% year-on-year in May, while housing, water, electricity, gas and other fuels recorded a modest annual increase of 0.8%, indicating limited upward pressure from utilities and energy costs.
The CBK, led by Governor Kamau Thugge, has maintained a cumulative 300 basis point reduction in the benchmark lending rate since initiating monetary easing cycles.
The rate currently stands at 10%, and a further cut is widely anticipated as inflation remains comfortably within the target band of 2.5% to 7.5%.
Thugge recently projected that inflation will remain within the target range through the near term, with a possible rise toward the upper limit in September, primarily due to base effects and seasonal adjustments.
Analysts note that while current inflationary conditions remain favorable, upside risks may emerge. These include volatility in global sugar prices, proposed removal of value-added tax (VAT) exemptions on pharmaceuticals, animal feed, mobile phones and locally assembled motor vehicles, all of which could reintroduce inflationary pressures in the second half of the year.
Meanwhile, record foreign-exchange reserves continue to support the Kenyan shilling, limiting imported inflation and providing CBK with additional flexibility in its monetary policy decisions.
The CBK’s Monetary Policy Committee is scheduled to meet on June 10 with a sixth consecutive interest rate cut widely expected in response to the benign inflation outlook and the need to stimulate economic activity in the East African economy.
