Kenya’s year-on-year inflation rate rose to 4.1% in April, up from 3.6% in March, according to the Kenya National Bureau of Statistics (KNBS). The moderate uptick marks a continued upward trend since inflation hit a low of 2.7% in October 2023. On a month-to-month basis, inflation was recorded at 0.3% in April.
Despite the increase, the inflation rate remains comfortably within the Central Bank of Kenya’s (CBK) target band of 2.5% to 7.5%, offering a reassuring sign of macroeconomic stability amid global economic uncertainties and domestic financial challenges.
The rise in inflation is attributed to marginal increases in prices of key goods and services, including food, housing, and transport. However, the relatively subdued rate suggests that inflationary pressures are being managed effectively through monetary and fiscal policies.
Earlier in April, the CBK made a surprising decision to lower its benchmark lending rate for the fifth consecutive Monetary Policy Committee meeting, setting it at 10.0%. The move was aimed at boosting private sector credit and supporting economic recovery, especially in sectors still recovering from post-pandemic slowdowns and global supply chain disruptions.
Analysts viewed the rate cut as bold, given the upward trend in inflation, but noted that the CBK appears confident in its inflation outlook and is prioritizing growth. Lower borrowing costs could encourage more investment and consumption, both of which are vital for economic expansion.
Kenya’s inflation figures come at a time when other regional economies are also grappling with similar pressures stemming from food prices, global fuel costs, and currency volatility. However, the country’s relative price stability compared to past years is seen as a positive development for investors and households alike.
Going forward, the CBK is expected to maintain a delicate balance between supporting economic growth and keeping inflation within the desired range. Policymakers will be closely monitoring both domestic developments and external shocks that could impact future inflation trajectories.
The next Monetary Policy Committee meeting will provide further insight into how the CBK plans to steer the economy amid evolving economic conditions.
