Is inflation the most common word in economics? Maybe not, especially with giant words like ‘financial markets’, ‘Gross Domestic Product’, ‘Interest Rates’ and others.
Inflation, however, has caught the attention of everyone in recent years (pandemic period) including my 10-yr-old nephew who defined it as “when things become really expensive”.
The rate of increase in prices for certain goods or services over a given period, representing how much more expensive the said commodities have become-say over a year- is inflation.
Experts have said inflation remains a threat, even with the worst(pandemic) behind us, pointing out that it’ll likely be a couple of years before prices really come down from the highs experienced this year.
Kenya’s inflation rate was at 9.5% in November 2022, holding close to a near 5-1/2-year high of 9.6% in the previous month but below market estimates of 10.1%.
To break down the difference in the two months, prices slowed down a bit for food & non-alcoholic beverages (15.4% vs 15.8% in October); furnishings & household equipment (10.6% vs 10.9%) and housing & utilities (6.1% vs 7.1%). Conversely, prices continued to climb mostly for transportation (11.7% vs 11.6%), alcoholic beverages & tobacco (7.2% vs 6.7%); restaurants & hotels (6.2% vs 5.3%) and personal care, social protection and miscellaneous goods and services (7% vs 6.1%).
The current country’s Consumer Price Index (CPI) increased by roughly 0.8 percent compared to the month of October, mainly due to higher prices in food and transport.
When COVID-19 struck in 2020, the Kenyan government reduced taxes on cooking oil and gas to 14%, as part of a package of measures to help Kenyans deal with the economic shocks of pandemic. However, it reintroduced the 16% tax on cooking oil and gas in 2021, even though the country had not yet fully recovered from the economic impact of the pandemic.
The price of a 2kg packet of maize and wheat flour hit two hundred shillings (US$2) from a low of 120 shillings in about three months. That is a 67% increase.
Speaking to one Millicent Lainora a 29-year-old single mother of four, I got to understand from a ‘mama mboga’s’ perspective, the impact of inflation on ‘hustlers’.
According to Millicent who resides in Kibra, her vegetable business is not doing as well as it used to as people rarely buy cabbage, Sukuma wiki or spinach like they used to with the soaring prices of accompaniments.
Not to be gender-biased or anything, but there is an alarming trend of single-parent women hustling their way to provide a livelihood for their family in the Kibra area.
Veronica Vitengo, 46-year-old single mother of six children (two independent) runs a grocery shop at the Kibra market makes a profit of 1500 shillings from a five thousand shillings’ stock that lasts longer than before.
Not to forget Jane Muchiri who has been in the mitumba business for close to 30 years in the Toi Market, also a single mother.
In this light, the ‘common Mwananchi’ felt the effects of inflation more on the price of groceries since food and non-alcoholic beverages usually account for at least one third of a household expenditure.
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One of the Big 4 Agenda pillars is food security, which was threatened the most by current economic woes.
According to statistics released in November 2021 around eight million people lacked sufficient food for consumption in Kenya.
Fluctuating food prices in Kenya also depend on the varying domestic agricultural output. Particularly, when weather conditions are unfavorable, crop outputs are affected and, consequently, food prices increase – a scenario contributing to the persistence of food insecurity.
Another major driver of inflation in Kenya is corruption. The former president, Uhuru Kenyatta, highlighted the cost of corruption to the economy at 2 billion shillings, translating to about 7% of GDP annually.
Since the economy is struggling under the burden of Covid-19, there is a need to focus on the MSME sector as we re-examine our economic growth amidst all the resilience.
In the current government’s ‘Bottom Up’ economic policy, job creation and focus on the production in among its priorities.
Agriculture contributes at least half of the country’s GDP, ¼ directly and the other ¼ indirectly. Statistically, 1 in every 6 households are food poor.
The economic policy’s argument line is to spend money to support farmers to increase productivity, that way farmers can feed themselves and at the same time contribute to food security and the economy in general.
In the long run, Kenya must produce more of whatever is in shortage.