Latest statistics from Kenya National Bureau of Statistics show that the overall inflation rate for month of September 2012 dropped to 5.32 percent from 6.09 percent in August 2012.

This drop comes despite a marginal rise in the Consumer Price Indices (CPI) which was posted at 131.89 in September 2012 from 131.51 in August 2012 reflecting a 0.29 percent increase.

CPI measures changes in the price level of consumer goods and services purchased by households.

This rise in the CPI reflects an increase in the cost of consumer goods and services over the month of September 2012 in comparison to the cost of consumer goods and services over the month of August.

Why did the inflation rate drop?

Inflation rate is the percentage change in the price of goods and service, in Kenya’s’ case, annually.

Price of goods and services are represented by the CPI, so inflation is the percentage change in CPI annually.

The CPI posted for September 2011 stood at 125.23, one year later, the CPI stands at 131.89. The difference between September 2011 and September 2012 CPI is 6.66

131.89 – 125.23 = 6.66

Percentage change in CPI is 5.32 percent

6.66/125.23 = 5.32

Thus, rate of inflation for September 2012 dropped to 5.32%