Kenya: Inflation comes in at joint-highest level since August 2024
Latest reading: Inflation came in at 3.6% in March, up from February’s 3.5%. March’s reading marked the joint-highest inflation rate since August 2024. Looking at the details of the release, the main drivers for March’s uptick were stronger price rises for clothing and footwear, food and beverages, hospitality, and transport. Meanwhile, prices for health grew at a more moderate pace and housing and utilities costs decreased.
Accordingly, annual average inflation edged down to 3.8% in March (February: 4.0%).
Finally, consumer prices rose 0.40% over the previous month in March, accelerating from the 0.31% rise logged in February.
Outlook: Our Consensus sees inflation accelerating from March’s level through Q4 2025. That said, price pressures should average within the Central Bank’s target of 2.5–7.5% in 2025 as a whole, as a result of high bank lending rates and a strong local currency. Potential tax hikes, rising barriers to global trade and sharper-than-expected interest rate cuts in response to higher U.S. tariffs pose upside risks for inflation.
Panelist insight: Oxford Economics’ Shani Smit-Lengton said:
“We forecast an increase in headline inflation from an average of 4.5% in 2024 to an average of 4.9% in 2025, driven by higher food and core inflation. A drought in the first half of 2025 will likely hurt agricultural production and drive up domestic food prices. On a positive note, the adverse impact of global prices on some food items should lessen going forward.”