Household budgets face further squeeze as food, fuel costs rise

Thursday, August 1st, 2019 00:00 |
Household budgets.

Zachary Ochuodho and Harrison Kivisu @PeopleDailyKe

Households face another crippling squeeze on disposable income after inflation jumped to a three-month high as price of a 2 kg packet maize flour hit a new high of Sh140. 

Inflation rate rose to 6.27 per cent from 5.7 per cent in June, the highest  recorded since April when the growth in the general level of prices of goods and services stood at 6.58 per cent.

Kenya National Bureau of Statistics (KNBS) attributed July inflation to the spike in food prices, petrol pump prices, housing, water electricity, gas and other fuel indices – which in turn pushed the prices of other related products – triggering inflation.

Inflation measures the cost of living and an increase means consumers used more money to buy the same quantities of food than they did the previous period hence eroding their spending power.

Consumers spent more during the period under review as retail prices for carrots, maize grain–loose, maize flour–loose and maize flour–sifted increased by 6.81, 0.52, 1.33 and 0.23 per cent, respectively compared to June.

Prices of onions, cigarettes also went up by 1.19 and 1.04 per cent, respectively while consumption of 50KWh and 200 KWh and electricity increased by 0.62 and 0.44 per cent, respectively, during the same period.

However, during the same period, prices of potatoes (Irish), sukuma wiki (kale), cabbage, tomatoes and milk (fresh packeted) declined by 11.74, 3.78, 2.78, 1.91 and 0.59 per cent, respectively.

Caleb Mugendi, Assistant Investment Manager at Cytonn Investment said the high cost of living in July was mainly driven by  a spike in food inflation following the late onset of long rains coupled with a rise in fuel prices.

“We projected the year-on-year inflation rate for the month of July to come in within the range of 6.2 per cent to 6.6 per cent, compared to 5.7 per cent recorded in June,” he said.

Mugendi said going forward, they expect the inflation rate to remain within the government target range of 2.5 per cent to 7.5 per cent.

KNBS Director General Zachary Mwangi, said during the period under review, food and non-alcoholic drinks index decreased by 1.04 per cent compared to a decline of 1.60 per cent in June. 

This decline was attributed mainly to a decrease in the price of potatoes, sukuma wiki, tomatoes, cabbages and milk.

“The decline in the price of these commodities outweighed the observed increase in the cost of other commodities like maize grain, maize flour-loose, beef with bones, carrots and onions over the same period,” Mwangi said.

Essential commodity

Meanwhile, price of maize flour in Mombasa has hit a new high with a 2 kg packet now retailing at Sh140 in some shops. A spot check by People Daily at various outlets established that many of retailers have hiked the price of the essential commodity by between Sh5 and Sh20.

A 2 kg packet is retailing at between Sh125 and Sh140, having shot up from around Sh118 two weeks ago. A similar packet is selling at Sh126, Sh123 and Sh140 in supermarkets surveyed. 

A bale of maize flour is going for between Sh1,500 up from 1,680. The increase in prices has irked Kenyans who have demanded government’s intervention.

“We are surprised that farmers in Rift Valley are saying they have adequate maize in their stores while Cabinet Secretary for Agriculture Mwangi Kiunjuri says there is inadequate supply.

The prices of the commodity is going up very fast,” a consumer George Oyugi said. 

He wondered why the cost of Unga is shooting up every day if the farmers have maize. He said prices of other commodities have also gone up. “I used to spend Sh300 per day now I am forced to cough out between Sh700 and Sh1,000 per day. This is unbearable,” said Oyugi.

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