The rate in east Africa's biggest economy shot to a near 15-year high of 31.5 percent in May, then slumped as food prices fell. But a 3 percent increase last month in electricity and fuel prices pushed it up again.

"Considering the easing of global commodity prices and the normalization of the Kenyan political economy, we expect food and energy price inflation to subside in the coming months," said Richard Segal, Africa strategist at Renaissance Capital.

Kenya is still recovering from post-election violence at the start of this year that hit the economy hard. Thousands of farmers were driven from their homes in the turmoil, harvests were destroyed and distribution routes were disrupted. A grand coalition government was forged in April to end the crisis following weeks of negotiations.

One analyst attributed the recent spike in inflation to excessive liquidity ahead of December's presidential poll, as the main political parties sought funds for their campaigns. "There was an increase in money supply before the election, and that always puts pressure on prices," Terry Ryan, economics professor at Nairobi University, told Reuters. "I see absolutely no way that January inflation will be over 20 percent. It will be below 20 percent."

Key lending rate

Last month, Kenya's central bank kept its key lending rate at 9 percent, saying inflationary pressure was a concern. But some industry leaders are frustrated with government efforts.

"We have got a lot of issues here in terms of cost of doing business," said Vimal Shah, chairman of the Kenya Association of Manufacturers, highlighting the sharp increase in energy costs.

In a related development, trading at the stock market took an upwards turn on Tuesday when the NSE 20 share index went up by 12.16 points to close at 4634.77.

On Monday the market index had shed 26.17 points to close at 4622.61 causing panic to investors. On the side, the New All Share Index (NASI), also jumped by 0.04 points to close at 97.208, compared to 97.167 points which it had registered on Monday.

Market analysts however noted that the change was still a lower margin compared to what the market lost on Monday. “The increase is still minimal compared to the drop we experienced the other day. However all this is just the normal fluctuation we experience in the market. Nothing has changed fundamentally,” said Mr David Mworia of Prudential Financials.