KENYA: Kenya’s Inflation Rises To 3.0% In December Amid Central Bank Policy Changes

        By Lisbeth Micheni, Kenya 

Kenya’s inflation rate edged higher to 3.0% year-on-year in December 2024, up from 2.8% in November, according to the Kenya National Bureau of Statistics (KNBS).

On a month-to-month basis, inflation rose by 0.6%, compared to a 0.3% increase recorded in November.

The latest figures indicate a modest uptick in the cost of goods and services, which economists attribute to rising food and energy prices as well as external market pressures.

Despite the increase, inflation remains within the Central Bank of Kenya’s (CBK) target range of 2.5% to 7.5%, allowing policy makers some room to maneuver.

Earlier this month, the CBK lowered its benchmark lending rate by 75 basis points to 11.25%, a move aimed at stimulating economic growth while maintaining manageable inflation levels.

The rate cut was welcomed by businesses and financial analysts, who see it as a sign of the government’s commitment to fostering economic recovery amidst global uncertainties.

A financial analyst Peter Mwangi, said: “The Central Bank’s decision is expected to provide a much-needed boost to credit availability, especially for small and medium enterprises.”

“However, the rising inflation underscores the need for vigilance in managing monetary policy to avoid undermining consumer purchasing power,” he added.

Kenya’s economy has faced multiple challenges in 2024, including prolonged droughts, fluctuating global commodity prices, and a depreciating shilling.

Despite these hurdles, the government remains optimistic about achieving its growth targets for 2025, banking on increased investment in infrastructure, agriculture, and renewable energy.

As Kenyans grapple with the effects of inflation, experts warn of potential risks in the coming months.

An economist Sarah Ndungu said: “We need to monitor global oil prices and food supply chains closely.

“Any major disruptions could further strain households already dealing with high living costs.”

The Central Bank is expected to release its next monetary policy statement in early 2025, where it will likely address these developments and outline its strategy for maintaining economic stability.

For now, Kenyans are bracing for the dual impact of rising prices and policy changes, hoping for a more stable economic environment in the new year.