Kenyan households could see milk prices ease in the coming months as the October-to-December rains improve pasture, but bread and cooking oil prices may remain high because international markets heavily influence their costs.
In a press release dated October 15, EBC Financial Group says improved rainfall could help farmers recover from the dry season, which reduced pasture and milk production.
However, Kenya’s reliance on imported wheat and edible oils means local weather conditions are unlikely to bring similar relief to consumers buying bread and cooking oil.
Fresh packeted milk prices rose 6 per cent in September, while white wheat flour prices rose 4.5 per cent, according to the September Consumer Price Index published by the Kenya National Bureau of Statistics (KNBS).
The Central Bank of Kenya (CBK) reported that core inflation, which excludes some of the most volatile prices, increased to 4 per cent in September from 3.4 per cent in August. Higher prices for milk, wheat products, and edible oils drove the rise.
David Precious, Senior Market Analyst at EBC Financial Group, said the impact of the rains would differ across the three products because milk production depends on local pasture. At the same time, wheat and palm oil prices are influenced by international supply and demand.
He added that international market conditions would continue to influence the cost of imported food products.
“Milk got dearer because cows had less grass, and rain fixes that. Shoppers may see milk ease first while bread and cooking oil hold,” he said.
Rains Could Ease Milk Prices, but Relief May Take Months
Agriculture Cabinet Secretary(CS) Mutahi Kagwe has linked the milk shortage to the dry season, which reduced pasture available to dairy cattle.
He expects milk production to improve as the October-to-December rains restore grazing conditions.
The Kenya Meteorological Service Authority (KMSA) outlook indicated that most parts of the country received below-average rainfall between June and August, putting pressure on livestock farmers.
The impact was particularly severe in parts of the North Rift. A dairy cooperative in Nandi County reported that daily milk deliveries dropped from about 10,000 litres to fewer than 2,000 litres.
Nationally, milk deliveries to processors declined from 84.4 million litres in June to 75 million litres in August, according to the Kenya Dairy Board (KDB).
The supply decline contributed to higher consumer prices, with fresh packeted milk up 6 per cent in September.
However, better rainfall may not immediately translate into lower prices. Farmers and traders in the North Rift have reported that animal feed prices rose by about a third. At the same time, Kagwe has also pointed to challenges involving farmers selling milk to brokers rather than processors.
The cost of producing milk also varies depending on how farmers feed their cattle. KDB figures put the cost of producing a litre at KSh24.50 under open grazing, compared with KSh39.50 for indoor feeding.
As pasture returns, farmers may spend less on animal feed, which will, in the end, lower the cost of producing milk.
However, prices will depend on how quickly milk deliveries increase and whether farmers pass on the lower costs to consumers.
Milk is a major household expense in Kenya. Fresh packeted milk ranks seventh among the individual items in the KNBS inflation basket, while loose milk ranks ninth.
The KDB estimates annual milk consumption at 110 litres per person, the highest in sub-Saharan Africa. Government figures also show that dairy contributes 4.5 per cent of gross domestic product and supports about 1.8 million smallholder households.
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Bread Prices Remain High
Unlike milk production, which depends heavily on local pasture and rainfall, wheat supply in Kenya relies largely on imports.
Kenya imported 2.24 million tonnes of wheat in 2025 and produced about 255,000 tonnes locally, according to the KNBS Economic Survey 2026. This means imports account for the bulk of the country’s wheat supply.
The CBK has linked higher international wheat prices to supply constraints in the Black Sea region and dry weather in North America.
These conditions affect the cost of wheat entering Kenya and, in turn, the price of flour used to make bread and other wheat products.
White wheat flour prices rose by 4.5 per cent in September, adding to pressure on households already facing higher food costs.
Even if rainfall improves agricultural conditions in Kenya, it cannot directly resolve production or supply problems in major wheat-producing regions abroad.
The cost of imported wheat, together with other expenses incurred by millers, bakeries and distributors, will continue to influence the prices consumers pay for bread.
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Cooking Oil Prices Tied to Global Palm Oil Supply
Cooking oil faces similar pressures because Kenya imports more than 90 per cent of its edible oil requirements, according to the Agriculture and Food Authority.
The CBK said international palm oil prices had risen for a fourth consecutive month amid strong import demand and concerns that dry weather could reduce production in Southeast Asia.
The Malaysian Palm Oil Council has warned that El Niño-related weather conditions can affect palm oil output, with production impacts potentially emerging nine to 12 months later.
El Niño is a climate pattern associated with warmer-than-average sea surface temperatures in the central and eastern tropical Pacific Ocean. It can alter rainfall patterns in different parts of the world.
The KMSA outlook has also highlighted the current strong El Niño conditions, adding to concerns about the outlook for palm oil supplies.
For Kenyan consumers, these developments mean that cooking oil prices may remain under pressure even as local rainfall improves milk production.
CBK to watch inflation in October and November
The difference between locally produced milk and imported wheat and cooking oil is likely to remain important as the CBK assesses price movements in the coming months.
The September rise in core inflation to 4 per cent from 3.4 per cent in August suggests price pressures have spread beyond individual food items.
CBK has said a stable shilling is helping moderate imported inflation. Still, it is monitoring second-round effects, where higher costs spread into wages and the prices of other goods and services.
Fuel costs are another concern. The Energy and Petroleum Regulatory Authority raised diesel prices by KSh9.90 per litre on October 14, a change that could increase transport and distribution costs if the higher prices feed through to other parts of the economy.
A county director at the KMSA expects above-average rainfall to continue through November, potentially supporting a recovery in pasture and milk production.
However, the effect on the overall inflation rate will depend on whether milk prices fall enough to offset continued pressure from imported food products and other costs.
Precious said the next two inflation readings would show whether better weather was translating into lower household expenses.
“If milk falls but core inflation stays near 4.0%, rain has helped households before it has helped the central bank’s measure,” he said.
“If higher diesel costs spread into other prices, relief on milk may be smaller than it looks.”
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