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Inflation expected to drop on increased stocks

Inflation could ease as food security remains stable, supported by adequate supplies of major food staples in the markets due to the previous season’s production, and continued trade inflows from neighbouring countries.

The price of food, which takes up the largest share—36 per cent—of the basket of goods that is used to calculate inflation could drop further, according to a report by the Famine Early Warning Systems (FEWS NET).

The report shows that wholesale maize prices across major urban reference markets of Nairobi, Eldoret and Kisumu remained stable between April and May, apart from major fluctuations in Mombasa mainly due to dwindling local supply.

It says maize imports from Tanzania were expected to typically increase from last month as traders try to offload the 2015 stocks in preparation for restocking with the fresh supplies from the above-average production form the neighbouring country.

The prices of maize are lower compared to their respective five-year averages—by as much as 18 per cent lower—implying sufficiency in market supplies.

“Dry bean prices remained stable across these urban markets and within averages, except in Kisumu where they were 15 per cent above average due to dwindling supplies,” the report says. The marginal decline in inflation is, therefore, supported partly by stability in major staple food prices.

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