Kenya's year-on-year inflation rate which has fallen for four consecutive months from a high of 20% in November to 15.61% in March has fallen once again in the month of April to 13.06%. This significant drop can be attributed to lower food prices observed during the month. The increase in fuel cost may have marginally reduced the decline in inflation.

Inflation can be viewed as a gradual increase in the price of goods.

Yesterday the Kenya National Bureau of Statistics (KNBS) reported a drop in inflation and consequently we might observe a fall in the Central Bank Rate (CBR) as set by the Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK). The MPC has held the CBR at 18% for the last three months in a bid to curb and reduce inflation. This seems to have worked as inflation has fallen by almost 7% since November last year.

However, it is possible that the CBK may hold the CBR at 18% or just decline it very slightly. This is because the 13.06% reported is still higher than the government’s ideal situation of 9%.