In Kenya, the Consumer Price Index (CPI) is based on expenditures of both urban and rural households. The most vital categories are food and non-alcoholic beverages amounting to 36%. Housing, gas, water, electricity and other fuels represent 18.2%. Transport 8.7%, clothing and footwear 6.2%. Restaurants and hotels represent 4.5% as well as miscellaneous goods and services at 4.5%.
Communication accounts for 3.8%, health for 3.1 % and education also at 3.1%. Recreation and culture represents 2.3% while alcoholic beverages, tobacco and narcotics the remaining 2.1%.
Consumer prices rose at 0.54% over the month of December 2017 contrasting November which was at 0.23%. December’s increase was broad-based and was spear headed by a surge in transport prices which came in at 2.44% higher than the previous month.
It remains at midpoint of the Central Bank medium term target band of 2.5%-5.5%. Annual average inflation dipped to 8.2% in December, a tick below the 8.3% recorded in November. The latest inflation suggests that the Central Bank may cut its policy rate in a bid to stimulate higher economic activity after keeping it on hold at 10.0%.