Import costs set to raise as shilling weakens further against dollar

Import costs set to raise as shilling further weakens against dollar

The Kenyan shilling is now under new pressure against the US dollar after it hit a new record low Monday, signaling the high cost of importing goods and services.

According to the Central Bank of Kenya (CBK), the Kenya shilling hit a record low on Monday, trading at an average of 113.94, but its volatility saw it draw back to 113.8 level on Tuesday.

According to Bloomberg, the shilling had been trading at 114 against the dollar at some point during the day on Monday.

The weaker shilling can also be anchored on the intensified Russia’s invasion of Ukraine amidst damaging sanctions that the United States has imposed on Vladimir Putin, by way of dropping offense against President Zelensky.

Market volatility saw Equity Bank selling $1 at 119.55 as well as buying the exchange rates at 111.25.

Co-op Bank was selling the dollar at 119.35 while buying it at 107.35. The greenback was also being sold by Stanbic Bank and GTB Bank at 118.50 and 117.55, respectively.

“The shilling’s depreciation is likely to reverse the six-month products for processing and capital goods for investment,” said KAM CEO Phyllis Wakiaga.

“As an outcome, also as Kenyan Shilling drops in value, importers should indeed pay more for raw materials and intermediate goods.”

Despite a weaker shilling, the cost of living in the country eased according to the latest fgures by the Kenya National Bureau of Statistics.

February inflation rate according to KNBS eased to 5.07 percent from the highs of 5.37 percent due to retained cost of fuel prices at the pump.

Maximum prices at the pump has for instance left petrol and diesel prices at Ksh.130.54 and Ksh.111.51 on average countrywide in the month of February.

Meanwhile, the cost of electricity measured by 50 units (kilowatts) was also unchanged at Ksh.796.83 during the month while house rents for a single room were only up by a mere 0.24 percent.

This is despite the cost of food having risen for the past one month. According to KEBS, food and non-alcoholic beverages index went up by 0.83 percent in February.

A two kilogram pack of sifted maize flour for instance now costs Ksh.129.25 from Ksh.126.31 while a 400 gram loaf of white bread costs Ksh.55.85 on average from Ksh.55.19.

Meanwhile, 500 grams of cooking fat costs Ksh.149.44 from Ksh.142.05 while the cost of one litre salad cooking oil has soared by 2.1 percent to Ksh.305.70.

A kilo of Irish potatoes costs Ksh.78.17 on average from Ksh.76.16 while a kilo of carrots cost more by 2.1 percent at ksh.83.08.

The recent inflation rate is the lowest on record since October 2020 when the rates stood at 4.84 percent.

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