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Kenya: High Food And Energy Prices Raise Inflation

The rising cost of food and energy has cast a long shadow on economic growth, wiping out gains made, especially by the low-income earners.

The two items, which consistently grew by a double-digit figure all year through, have been used by economic growth critics to rubbish claims that the economy is doing better than it was years ago.
Blamed on a severe shortage of rainfall in 2005 and the first quarter of 2006, as well as rising world crude oil prices, the cost of living went up to hit an all-time high of 19.1 per cent in March 2006, in terms of month-on-month inflation. The overall annual inflation rate increased from 10.3 per cent in 2005 to 14.5 per cent in 2006. According to the Government data, the rate of inflation on the two remained the highest through out the year.

“Inflation for these two categories has remained above 10 per cent in 2006 thereby contributing to the upward trend in overall inflation since the beginning of 2006,” analysis by the Government says.

All the other categories captured by the index returned a single-digit rate over the year, except alcohol and tobacco whose inflation rose to 10 per cent in March 2006, before reverting to the single digit level. With almost half of the country population said to be on the low-income bracket, views dismissing the growth resonated well with the majority.


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