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Urban Inflation Index December 2009

Comparing changes to three months ago – September 2009 and a year ago – December 2008

What’s gotten more expensive

Fuel: A litre of petrol is Kshs 83.5 (~$5.0/gal) up slightly from 80.9 three months ago, but still about 10% lower than the 92.7 of last December.

Entertainment: A bottle of Tusker beer (at local pub) is now Kshs. 140. This is up from 120 price of three months ago and also a year ago. There is a proliferation of new pubs all the time in Nairobi – and as others shut down, more entrepreneurs step up (with a new name, coat of paint and furniture) to take their turn behind the bar counter. The median price in Nairobi now seems to be 150 shillings ($2) for a beer, as Tusker brewer east African Breweries (EABL) remains untroubled by Summit of Keroche (what’s to blame? – poor distribution, dirty tactics by EABL, poor marketing?) or by the reports that South African giant SAB Miller may choose to re-enter the re-enter the Kenyan market following collapse of an EABL-SAB agreement in Tanzania.

Electricity/utilities: this month’s electricity bill is Kshs 2,100 ($28) compared to the 1,900 of three months ago, as well as last December. 2009 has been a year of harsh reality checks for Kenyans with the failure of rains, drying of dams and water & electricity rationing programs. And while electricity rationing has ended, water rationing is still on in urban areas, and in rural areas, water sources are diminishing and the usage of water is becoming a cause for tension among communities and neighbours. The government has set out to reclaim and restore water towers in the country, notably the Mau Forest, and has made investment in geothermal energy and is linking up with neighbouring country grids (Ethiopia, Tanzania) ; unfortunately wind and solar energy are not considered to be viable large scale avenues worthy of requisite investment.

about the same

Food: though the inflation impact of food items has been played down by the Central Bank (CBK) who said food prices distorted inflation figures, there has not been much change in the last quarter.

food is bad for inflation

Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 83 compared to 84 three months ago. But this is much better for consumers than the 97 shillings of a year ago.

Other food item: Sugar (2 kg. Mumias pack) is Kshs. 200 up, unchanged from 3 months ago, but 25% higher than the 160 shillings of a year ago.

Consensus among farmers and traders is that 2010 will be a worse year for food production in the country, so we’ll see where prices are next year.

Gotten cheaper

Communications: there have been lots of developments towards reducing the cost of communications as competition in the sector heats up.
- Mobile giant Safaricom, who told institutional investors that they aim on becoming the ISP of choice for Kenyans, have been pushing out internet devices at a rapid pace. The company earned 7.2 billion ($96 million) from SMS and data in H1 of 2010 (up from 2.1 billion a year ago). They have now partnered with Equity Bank to get laptops computers (with free modems) to thousands of consumers by way of bank loan
- Both Safaricom and Orange (Telkom Kenya) are selling 3G modems’ at a cost of Kshs 2,000 (~$26) – these used to cost 4,00 before. And with Safaricom you can cash in just 2,000 bonga (loyalty) points and get the modem, which used to cost 15,000 bonga points a year ago.
- ISP’s respond Wananchi have lowered Internet prices of their broadband zuku packages since the arrival of fibre cable connection in Kenya. Meanwhile KDN is offering free butterfly service over Christmas and have a program with family bank to offer free wifi services to their customers.

Foreign Exchange: 1 US$ equals Kshs. 75.62 compared to Kshs. 75.93 three months ago and 79.08 a year ago.

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5 thoughts on “Urban Inflation Index December 2009

  1. PETER

    FIRST banks according to keroche the manufucture just enuff alcohol to satisfy the greater naivasha region. thats why you cannot find summit in many outlets.

    distribution… while summit may be trying hard to market the malt, an intersting fact is that eabl controls most of the distribution points… ie… it owns the furniture like plastic tables, fridges, displays and other stuff needed to run a pub. the contracts on this things means that you can not sell anything else apart from their products using their infrastructure.

    reputation… keroche will have to work hard to lose the cheap and poor quality lower end of the market association that comes with its fortified wine category. the name itself inspires pictures of dirty drunks lying by the road side rather than that of a world class malt, which summit malt incidentally is..

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