Kenyan inflation at four-year low paves way for rate cut

(Bloomberg) — Kenya’s annual inflation fell to its lowest level in almost four years in June as food price increases were more moderate, providing some respite for consumers increasingly frustrated by the cost of high life.

Consumer prices rose 4.6% year-on-year this month, the Nairobi-based Kenya National Bureau of Statistics said in an emailed statement on Friday. The figure matches the median estimate of three economists in a Bloomberg survey and is the lowest rate since September 2020. Prices rose 0.4% during the month.

This figure will be encouraging for monetary policymakers who have raised the key interest rate by 600 basis points to 13% since May 2022 to bring inflation back to the 5% midpoint of the central bank’s target range, where they prefer to anchor expectations. It could also pave the way for a rate cut when they meet in August.

The cost of living crisis has stoked tensions. Protests that began last week against a tax bill that demonstrators say would lead to higher prices have reached a fever pitch this week.

The measures led President William Ruto to scrap the bill on Wednesday, after at least 23 people died during protests. The proposed taxes on everything from bread to motor vehicles to mobile money were aimed at improving state finances and accessing more funding from the International Monetary Fund.

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(Updated with chart and line on possible rate cut in paragraph three)

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