Wednesday, May 29, 2024
HomeHow Food Prices Will Change in Coming Months - CBK

How Food Prices Will Change in Coming Months – CBK

A report by the Central Bank of Kenya’s Monetary Policy Committee (MPC) on Monday, May 29, showed mixed expectations amid economic uncertainties.

MPC stated that food inflation is likely to ease in the coming months, but could be countered by high fuel prices after the government dropped subsidies introduced by the previous regime.

According the report, the price of food commodities was lower in April as compared to March, as a result of the ongoing rains in most parts of the country.

“Food inflation declined to 10.1 percent in April from 13.4 percent in March, due to lower prices of vegetables attributed to the ongoing rains, and improved supply of select non-vegetable food items,” read part of the CBK report.

MPC further indicated a decline in overall inflation to 7.9 percent in April, 2023 from 9.2 percent in March.

Central Bank expect food inflation to moderate in the coming few months following the long rains, and lower global food prices.

“Nevertheless, the recent increases in electricity prices, the removal of the fuel subsidy, and a sharp rise in sugar prices are expected to exert moderate upward pressure on overall inflation,” CBK revealed in a statement.

Currently a litre of petrol goes for Ksh182.70, diesel is retailing at Ksh168.40 and erosene rose at Ksh161.13, following The Energy and Petroleum Regulatory Authority’s (EPRA) upward review on May 14.

The recently released Economic Survey 2023 showed that the Kenyan economy remained resilient in 2022, despite the subdued agriculture performance due to prolonged drought.

Real GDP grew by 4.8 percent in 2022, reflecting robust performance of the services sector, particularly transport, insurance, accommodation and food services.

The CEOs Survey and Market Perceptions Survey—revealed improved optimism about business activity and economic growth prospects for the next 12 months.

“The optimism was attributed to improved weather conditions, which are expected to support agricultural production, easing of inflation, and resilience of the private sector,” read part of the CBK statement.

Nonetheless, respondents expressed concerns about the proposed increase in taxation, rise in electricity and fuel prices, and the weakening of the Kenya shilling.

The Survey of the Agriculture Sector conducted in the first half of the month, revealed that the prices of key food items had declined.

Nevertheless, respondents identified transport costs, high input costs, infestation by pests, and unpredictable weather patterns, as the major factors constraining agricultural production.

At the same time, CBK noted that the global economic outlook remains uncertain, reflecting continued concerns about financial sector stability in the advanced economies.

For instance, continuing geopolitical tensions particularly the ongoing war in Ukraine, and the pace of monetary policy tightening in the advanced economies.

However, commodity prices in the global markets, particularly of oil and food, have continued to ease.

Kenyans are grappling with high cost of essential commodities, with prices of sugar and maize flour shooting through the roof. The prices could further surge when more taxes kick in on July 1.

 

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