Why food has become expensive in Kenya
Inflation rates have been on the rise globally with Sub-Saharan Africa driving the trend more than any other region.
Food prices account for roughly 40 percent of the region’s consumption basket. According to the UNs global food price index, last year, the cost of cereal went up by 13 percent, meat 17 percent, sugar 20 percent, and vegetable oil 34 percent.
A survey by the Kenya National Bureau of Statistics (KNBS), indicated that February inflation dropped to 5.08 percent from January’s 5.3 percent due to an increase in prices of commodities under food and non-alcoholic beverages, electricity and gas.
The difference between food prices in past decades and now is largely due to the product of inflation of the U.S. dollar, which steadily drives up prices.
According to Africa News, the peak of the COVID-19 pandemic in March 2020 disrupted local and global production, setting off supply chain issues. These have affected many different areas, from manufacturing and sales to the availability of medical supplies. These disruptions also touched food supply chains.
The recent food increase inflation is attributed to the rising oil prices, which raises fertilizer prices and transportation costs, droughts and export restrictions imposed by some major food exporters, and stockpiling in some countries.
Recently, Kenyans on Twitter protested the hike in food prices through the #lowerfoodprices. They criticized the government for failing to stem the rise in the prices of everyday items which they say has made life unbearable.
The increase in cost of living can be attributed to a combination of external and domestic factors. For example, the pressure from the International Monetary Fund (IMF) to raise more revenue, meant the government had increased taxes on everyday household goods such as cooking gas, fuel and food.
The Value Added Tax (VAT) was not applied to cooking gas for many years but a levy of 15 percent was imposed in July 2021.
And with the continued intensified war between Russia and Ukraine, the global market is staring at a shortage in gas supply, with the US recently putting to a stop its gas supply from Russia, as one of the key sanctions.
This, has trickled down to an ordinary Kenya with gas dealers and suppliers opting to hike commodity prices.
Currently, refilling a 13kg cylinder is costing Ksh.3340 up from Ksh.3113, and a 6kg gas cylinder is retailing at Ksh.1560 from Ksh.1400.
A few years ago, business analysts globally said that the increased tariffs which the USA imposed on China’s goods would have a direct impact on food prices. These prices unfortunately are passed on to consumers. One has to understand that the Federal Reserve in the USA slows or speeds inflation of the US dollar to pursue various strategies of the economy.
So, will the food price keep increasing? Well, the outlook is uncertain. Food inflation and Consumer Price Index inflation (CPI) could moderate if commodity prices ease and pandemic-induced global supply chain disruptions resolve. However, the high food inflation could persist if inflation expectations become de-anchored or supply chain disruptions continue.