Kenya’s inflation set to rise further as food, fuel and transport costs squeeze households

Kenya’s inflation set to rise further as food, fuel and transport costs squeeze households

The CBK warns that rising food, fuel and transport costs could push inflation higher through November 2026, following a rise to 6.8 per cent in September.

Kenya’s inflation rate is expected to rise further over the next three months as higher food, fuel and transport costs threaten to intensify pressure on household budgets, according to the Central Bank of Kenya (CBK).

The CBK’s September Market Perceptions Survey shows that respondents expect inflationary pressures to remain elevated between September and November 2026, driven by food supply constraints, rising energy costs and global economic shocks.

The outlook follows an acceleration in inflation to 6.8 per cent in September, marking the third consecutive monthly increase and bringing the rate closer to the upper limit of the government’s target range of 2.5 to 7.5 per cent.

Inflation rose from 6.6 per cent in August, 6.5 per cent in July and 6.4 per cent in June, reflecting mounting pressure from food, transport and household energy costs.

According to the survey, higher fuel and energy prices could push up electricity bills, production expenses and distribution costs, making goods and services more expensive across the economy.

Food prices are also expected to remain under pressure due to supply constraints, lower output following the long rains season and distribution challenges, threatening to worsen the cost-of-living squeeze for households.

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Global commodity price movements and geopolitical tensions could further increase import costs, exposing consumers and businesses to additional price hikes.

However, the survey identifies several factors that could ease inflationary pressures, including improved agricultural production following the short rains, increased food storage capacity and stable exchange rates.

The CBK also expects its monetary policy stance and government interventions to help contain price increases, alongside stabilisation in global oil prices.

Over the medium term, respondents expect inflation to remain anchored around the midpoint of the target range, supported by favourable rainfall, farm input subsidies and improvements in food supply chains.

Despite the relatively stable medium-term outlook, the survey warns that global commodity prices, adverse weather conditions and geopolitical uncertainty remain key risks that could derail efforts to contain inflation.

The latest increase in inflation was largely driven by higher prices of food and non-alcoholic beverages, transport, and housing, water, electricity, gas and other fuels. These categories collectively account for more than 57 per cent of the consumer price basket.

Food prices increased by 9.5 per cent year-on-year in September, while transport costs rose by 15.6 per cent and housing-related expenses climbed by 3.2 per cent.