The Central Bank of Kenya (CBK) has revised upwards its economic growth projection for this year to 5% from its earlier projection of 4.9% as volatility in the global oil prices remain.

CBK Governor Dr Kamau Thugge said the 2026 growth forecast will be supported by expansion in the agriculture, services and industry sectors.

“The projected growth of the economy in 2026 has been revised upwards to 5pc from 4.9pc mainly reflecting stronger industry and services sector. This is up from 4.6pc in 2025.

According to CBK projections, agriculture sector is expected to expand by 3% this year, industry 5.2% and services 5.6%. The bank further projects the economy to grow by 5.3% next year.

Speaking a day after the Monetary Policy Committee maintained interest rates at 7.5pc, Dr Thugge said the high energy costs continue to impact food inflation, though government interventions such as subsidies and Value Added Tax reduction on fuel have helped to mitigate pressure on inflation.

Overall inflation increased from 6.6% in August to 6.8% last month on account of an increase in core inflation from 3.4% to 4%. The bank also noted the impact of higher milk prices which have contributed to a rise in inflation rate last month.

“The inflation for milk as of September was above 8% and that meant it was contributing in the overall inflation from 6.6% to 6.8% was largely for milk inflation. Had the milk inflation remained unchanged inflation in sep would have been more like 6.5%c rather than 6.8%,” he stated.

The bank projects overall inflation to reach a maximum of 7.2% in December this year before easing to a midpoint target range of 5pc in May next year.