Tag Archives: Inflation

Urban Inflation Index: July 2017

Comparing prices and inflation in Nairobi to four and five years ago. 

Price and inflation comparisons are made a bit difficult by the unprecedented (in recent years) shortage of certain food commodities. Back in 2008 as post-election violence rocked the country, supermarkets opening shop, receiving supplies, stocking shelves and selling fresh foodstuffs and household items were seen as one of the barometers that life was getting back to normal. But going into the August 8 elections, several supermarkets have had empty shelves, notably at Kenya’s largest chain, Nakumatt that is limping under debt, and empty shelves, with lawsuits from landlords and key suppliers and a delayed shareholder deal. Unlike Uchumi who faced a similar situation just over a year ago, Nakumatt has not shown humility in asking for a bailout from the government or relief from suppliers and partners.

On to the index

Gotten Cheaper (in four years)

Finance: Bank loans are 14.0% due to the interest capping law of 2016. Average bank rates were 17% in July 2013

Fuel: A litre of petrol is Kshs 97.1 (~$4.25/gallon) today in Nairobi. It was 109.52 per litre in July 2013 (and 117.6 five years ago).

About the Same

Staple Food: With just under two weeks to the elections, maize has been hard to find, even at the government subsidized prices of Kshs 90 per pack. In July 2013 the pack cost Kshs 104 (and it was 118 five years ago) But just how long it will stay at 90 is not clear as the 2017/18 budget drafted at a time of high maize prices and low supplies, zero-rated the importation of white maize for a period of four months. Will it go back up after this window closes?

Communications: Phone call rates flattened in 2013 even though at the time Airtel and Yu were bringing the prices down, while now Safaricom battles distant Telkom Kenya (rebranded from Orange) and Airtel, as well as Equitel from Equity Bank, with competition more on data pricing, and mobile money transfers – where M-Pesa still dominates.

Beer/Entertainment: A 200 bottle of Tusker beer is Kshs 200 at the local pub. This is the same price it was in July 2013. (And it was 180 five years ago)

Utilities: Pre-paid electricity is about Kshs 2,500 per month, which is unchanged from the last review. The calculation of pre-paid tokens remains a complicated exercise.

More Expensive

Other food item: Sugar is hard to find, more so for traditional brands like Mumias. A 2kg bag of Chemelil sugar is Kshs 290  compared to 250 in July 2013 and five years ago it was 237. Prices of other food commodities like milk and butter have also gone up.

Foreign Exchange: 1 US$ equals Kshs. 103.9 compared to 87.15 in July 2013 and 84.25 five years ago.

There has been quite some outward flow of currency ahead of the election.

Urban Inflation Index: March 2017

Comparing prices and inflation in Nairobi to four and five years ago.

It’s exactly four years since the last election and we are back into campaign mode for an election on August 8. How has life changed since the Jubilee government came to power? There are many reports about economic growth and food inflation, and the budget speech that was read last week had a planned expenditure of Kshs 2.6 trillion (~$25.2 billion) compared to the government’s first budget  that was Kshs 1.6 trillion for 2013/14.

On to the index comparing prices of basic urban commodities.

Gotten Cheaper

Finance: Bank loans are 14.0% due to the interest capping law of 2016. The Central Bank of Kenya’s bank supervision annual report for 2014 notes that the average lending rate was  16.99%  in December 2013 and 15.98% in December 2014.

Fuel: A liter of petrol is Kshs 101 (~$4.41/gallon) today in Nairobi. It was  Kshs. 111.6 per litre in March 2012 and Kshs 117.6 in March 2013.

Cooking Gas: A cylinder of LPG (cooking gas) is Kshs  2,030 today. It was about Kshs. 3,000 ($37) in 2012 for the 13kg cylinder.

Communications: Safaricom dominates. Prices are coming down and both Safaricom and Airtel have combined packages called Flex and Unliminet respectively . With Unliminet, Airtel customers get free WhatsApp, Facebook & Twitter of up to 100MB per day and at Safaricom, every reload of M-PESA  gets someone 3 free FLEX units. On the money transfer side,  Equitel and Pesalink are driving down the cost of mobile money usage.

About the Same

Beer/Entertainment: A bottle of Tusker beer is Kshs 200 at the local pub. This is the same price it was in March 2013.

Utilities: Pre-paid electricity is about Kshs 2,500 per month which is unchanged from the last review. The calculation of pre-paid tokens remains a complicated exercise.

More Expensive

Staple Food: A 2kg pack of (Unga) Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily, costs Kshs. 147 up from Kshs 97 in March 2012 and Kshs 105 in March 2013. But in his budget speech last week, the Minister proposed to zero-rate bread and maize flour to remove VAT. “ Manufacturers, Wholesalers, and Retailers who sell such goods will be expected to reduce the prices of these basic commodities, failure to which, I will reverse the policy. In addition to further lower the cost to Wananchi, the importation of maize during the next four months will be duty free. I expect, therefore to see a reduction of prices for these basic commodities which enjoyed by majority of our people.”

Other food item: Sugar: A 2 kg. Mumias Sugar pack is now Kshs 292; it was Kshs 245 in March 2012 and Kshs 250 in March 2013. It has hard to find Mumias sugar which is going through some issues, so this is the price of Chemelil sugar at the supermarket.

Foreign Exchange: 1 US$ equals Kshs. about Ksh 103 today compared to Kshs 83 in March 2012 and Kshs 85 in March 2013.

Utility: Water in Nairobi is more expensive.