Food Prices to Rise in Next 3 Months Over Weakening Shilling
Anticipated is an increase in food prices in the coming three months, owing to the ongoing impact of the weakening shilling.
As per a study conducted by the Central Bank of Kenya in January involving participants in the agricultural sector, it was uncovered that there is an anticipation of a rise in food inflation within the upcoming three months.
The report outlined that the expenses associated with importing food had risen, and it was expected that these extra costs would eventually be passed on to consumers by the stakeholders.
The stakeholders informed CBK that the expenses associated with imports were a consequence of the devaluation of the local currency.
Because imports are conducted in dollars, the depreciation of the shilling results in an increased cost for importing food items and other products into the country.
The current exchange rate for the dollar stands at approximately Ksh162 on average.
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“The Survey of the Agriculture Sector conducted ahead of the MPC Meeting revealed that respondents expected inflation to increase in the next three months, on account of high import costs, partly due to the depreciation of the exchange rate,” CBK detailed in its Monetary Policy Committee report.
Kenya predominantly relies on importing food items to meet the increasing demand for these products, and this practice also complements domestic production.
The depreciation of the shilling is anticipated to impact certain imported food products such as cooking oil, sugar, and rice.
Significantly, the nation has witnessed a decrease in rice production throughout much of 2023, leading importers to prioritize importing it to address the shortfall.
“The price of rice remains sticky due to reduced domestic production occasioned by high input costs, and an increase in the cost of importation of the commodity,” read the November 2023 Agriculture Survey.
Onions, primarily sourced from Tanzania, are among the imported vegetable items.
Tanzania onions are reported to be drier and have a better shelf life than those harvested locally.
Food Prices to Rise in Next 3 Months Over Weakening Shilling