Kenya’s Escalating Inflation Reaches 22 Percent

Kenya’s current inflation rate of 21.8 percent is set to go much higher in the next two months to stand at 25 percent, a report released by a group of international companies said on Thursday.

The report released in Nairobi by AIG investments warns that the escalating inflation is a threat to the economic growth of the country.

Month-on-month inflation in Kenya has continued on an upward trend for the third month in a row, with the inflation rising from 19.1 percent recorded in February to 21.8 percent for March due to a sharp rise in food prices, according to the Kenya National Bureau of Statistics.

The Central Bank of Kenya (CBK) announced on Wednesday that it was working hard to lower the current by inflation rate of 22 percent to five percent May this year.

CBK governor Njuguna Ndung’u attributed the rise in inflation rate to political instability in the country early this year, saying the figures should subside once the political stalemate is resolved.

According to a CBK report, the 22 percent inflation rate in the month of March was an outcome of seasonal cycles associated with increased consumption in December last year and the dry spells that followed in the first months of 2008.

The CBK report also attributes the high inflation tendencies to political instability that engulfed the country after elections last year.

However, the AIG investment report disagrees with CBK projections and states that the rates are set to increase in the coming month and hit an all time high of 25 percent and accuses the CBK of not addressing the situation with the seriousness it deserves.

The report disagrees with Ndung’u’s predictions that the economy will bounce back and record 4.5 to 6 percent growth in the year since its productive capacity was not destroyed.

The report warns that the cost of living could drastically go up.

The report also said the government’s expenditure for this year’s budget will have to increase in order to address the post election crisis and the expected expanded government.

Source African Press Agency

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