Kenyans are likely to pay more for goods and services after businesses increased their selling charges at the fastest rate ever recorded in June.
According to latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI), the move is driven by soaring operating costs that firms are increasingly passing on to consumers.
The Stanbic PMI found that around 41 per cent of businesses experienced higher input costs during the month, pushing overall cost inflation to its highest level since November 2023.
Stanbic PMI: Kenyans Face Record Price Increases as Businesses Raise Charges
Rising fuel levies, alongside higher prices for foodstuffs, paper, construction materials and information technology equipment, were cited as the main factors behind the increase.
The report said the sharp rise in operating expenses resulted in the quickest increase in private sector output charges in the survey’s history, signalling that consumers could continue to face higher prices in the months ahead.
“The Standard Bank Kenya PMI® signaled the quickest increase in private sector output charges in the survey’s history during June,” reads the report in part.
“The uplift was widely associated with rising fuel levies, which led to another pick-up in total input cost inflation. Rising business expenses also contributed to a reduction in output, even as customer orders showed signs of revival.”
Business Activity Remains Weak
Even as businesses raised charges, many continued to struggle with production. Output declined for the fourth consecutive month as firms cited weak customer demand, supplier capacity constraints and cash flow challenges.
Despite the slowdown in output, there were signs that the private sector is beginning to recover.
The headline Stanbic PMI rose from 46.6 in May to the neutral 50.0 mark in June, signaling that business conditions stabilized after three consecutive months of contraction.
A reading above 50 indicates improving business conditions, while one below 50 signals deterioration.
Also Read: How Young Kenyans Can Access Business Loans Without Collateral – Useful Tips by a Banking Economist
New orders also returned to growth for the first time since February, with firms attributing improved sales to customer referrals, marketing campaigns and business expansion initiatives.
The increase in demand, however, outpaced production, leading to a rise in unfinished work.
Businesses also reported the longest supplier delivery delays since April 2020, blaming product shortages and higher transport costs that made some suppliers reluctant to deliver goods until vehicles were fully loaded.
Companies responded by increasing inventories and hiring more workers after a slight decline in employment in May.
Business confidence also strengthened for the second consecutive month, reaching its highest level since February 2023 as firms expressed optimism about expansion plans, increased marketing, technology adoption and expectations that fuel costs could ease.
Also Read: New CBK Report Maps Sectors with Highest Hiring Demand in Kenya 2026
Economist Warns Rising Fuel Costs Could Slow Kenya’s Recovery
Commenting on the findings, Standard Bank economist Christopher Legilisho said the June PMI pointed to early signs of recovery despite persistent cost pressures.
“The Stanbic PMI for June was upbeat on signs of a recovery after three months of weakness. Firms’ new orders grew due to robust sales volumes. However, output conditions remained subdued on concerns of soft client demand and rising price pressures,” he said.
Legilisho warned that businesses were still under significant pressure from rising costs, which are increasingly being passed on to consumers.
“Most concerningly, input and output prices accelerated sharply, reflecting higher fuel and raw material costs and a stronger pass-through to consumers. This has been keeping margin pressure elevated; further, it implies that the current price shock may last longer than the 2022 oil-price episode. Still, as international oil prices have been declining, there may be reprieve for firms in time,” he added.
Follow our WhatsApp Channel and X Account for real-time news updates.
