Kenya's inflation rate up to 6.99%

Kenya's year-on-year inflation rate has surged to 6.99% in January, the highest since February last year, underpinned by a rise in food prices. The inflation figures, while within the Central Bank of Kenya's (CBK) targeted range, have sparked concerns amidst a backdrop of impending hunger and unreliable rainfall in the country. James Mburu, a Research Analyst at Old Mutual Securities, shed light on the economic implications of the latest inflation data during an interview with CNBC Africa. Mburu attributed the inflation spike to the persistent drought conditions experienced in January. He noted that the inflation rate had escalated by 5% on a monthly basis, signaling that the country could witness further inflation pressure in the coming months. Despite the increase, the inflation rate stayed below the upper limit of 7.5%, offering some relief. However, the proximity to 7% is a cause for caution, especially given the looming food crisis. The rise in inflation presents a challenge for the CBK, which may need to evaluate its monetary policy stance to support private sector growth. Mburu highlighted that sustained high inflation levels could hinder private sector credit growth, which has already been sluggish. The CBK's decision to maintain the Central Bank Rate (CBR) at 10% was viewed as a strategic move to stabilize the economy amidst global and local uncertainties. The surge in food prices has particularly burdened ordinary Kenyans, despite the inflation rate being below the CBK's upper threshold. The cost of living has noticeably increased, with food prices registering significant hikes. This spike in consumer prices is expected to impact local consumers, with food expenditure occupying a substantial portion of the Consumer Price Index (CPI) basket. Meanwhile, the decline in Eveready East Africa's financial performance has garnered attention. The company reported a loss after tax of Kshs 207 million, with stock supply challenges exacerbating its woes. Eveready attempted to diversify its business lines as a hedge against market volatilities but has struggled to achieve profitability. The negative effects of the loss were evident in the company's share price, which plummeted by nearly 24% year-on-year. Mburu indicated that Eveready's challenges mirrored those faced by other listed firms operating in a competitive market environment. The uncertainties in both the macroeconomic landscape and the business sphere have posed a formidable test for companies like Eveready, calling for strategic business realignment and resilience amid market headwinds.