By Steve UMIDHA
Kenya’s inflation eased slightly to 6.8% year-on-year in November from 6.9% a month earlier, the statistics office said on Thursday.
On a month-on-month basis inflation was 0.2%, compared to 1.0% in October, the Kenya National Bureau of Statistics (KNBS) said in a statement.
Transport, housing and utilities, and food were major contributors to the East African nation’s year-on-year inflation, KNBS said.
Higher interest rates are generally a policy response to rising inflation. Conversely, when inflation is falling and economic growth slowing, central banks may lower interest rates to stimulate the economy.
Lower inflation is good news. CBK has been raising interest rates to slow the economy so that businesses will have fewer reasons to raise prices. We’re hoping for a “soft landing,” which means solving the inflation problem without needing a recession.
Inflation measures how much prices are rising over time. A recession is a period of negative economic growth. An emergency fund could give you a financial cushion in down markets brought by inflation and recessions.
Kenya’s average annual per capita income is US$5,270. With inflation, citizens lose even this limited purchasing power. The same money buys less. Wages and salaries do not go up fast enough.
Kenya could increase the supply of basic commodities by allowing competitive importing of maize and wheat. The increase in supply would reduce the price.
Competition is one of the most powerful weapons against inflation. In the long run, Kenya must produce more of whatever is in shortage.