Kenya: Annual inflation slows

  1. Posted on Thursday 1 January 2009 - 09:11
    deodatus
    deofuga@yahoo.com
    Deodatus Mfugale, AfricaNews reporter in Dar es Sallam, Tanzania
    Kenya's annual inflation rate slowed nearly two percentage points in December due to lower fuel and electricity prices, but concerns about the rising cost of food persist in east Africa's biggest economy.
    kenya market
    Official data published on Wednesday showed prices rose 27.7 percent in December compared with the same month a year earlier, down from 29.4 percent in November. Core inflation, which excludes food, slipped to 10.6 percent from 12.3 percent, Reuters business report said.

    "We are still in a frighteningly high inflation scenario," said Robert Shaw, a Nairobi-based economist. "The main concern now is rain deficiency. In many areas, harvests may be non-existent and that will put pressure on food prices."

    Kenya's National Bureau of Statistics said food prices, which make up half the consumer price basket, rose 2.6 percent in December from November to stand 37.5 percent higher than a year earlier. Tomatoes, cabbages and beef prices rose most.

    But double-digit month-on-month falls in diesel, petrol and paraffin prices, along with a 6.9 percent drop in electricity costs, helped slow inflation. Transport and communications costs also dropped 1.5 percent in December.

    Kenya has been wrestling with soaring commodity prices, such as oil and fertiliser, and the aftermath of January's post-election violence that scared off tourists and disrupted farming, which makes up a quarter of gross domestic product.

    The annual inflation rate in Kenya's neighbour Uganda also eased in December to 14.2 percent from 14.6 percent, according to data published on Wednesday, but food price inflation remained stubbornly high.

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