Kenya’s cost of living index fell to 6.62 percent in July down from 7.03 percent in June, 2015 due to drop in the price of foodstuffs which consumes the largest portion of household budgets including maize flour, cabbages, sukuma wiki and potatoes as well as cooking gas.
According to figures from the Kenya National Bureau of Statistics, the food and non-alcoholic drinks index decreased by 0.6 percent between June and July as observed from decreases in prices of various food items.

Over the same period, the price of housing, water, electricity, gas and other fuels increased due to cost increases in respect of cooking gas, fuels and other household utilities. In the new power tariffs, cost of consuming 50 KWh of electricity remained the same between June and July while the price of 200 KWh decreased by nearly 5 percent.
The Consumer Price Index (CPI) is based on expenditures of both urban and rural households. The most important categories in CPI are food and non-alcoholic beverages (36 percent of total weight); housing, water, electricity, gas and other fuels (18.3 percent) and Transport (8.7 percent). Clothing and footwear account for 7.4 percent of total index and furnishings, household equipment and routine household maintenance for 6.2 percent.
Inflation rate in Kenya averaged 10.79 percent from 2005 until 2015, reaching an all-time high of 31.5 percent in May of 2008 and a record low of 3.18 percent in October of 2010.
A resurgent inflationary pressure in the economy in the recent months has prompted the Central Bank of Kenya (CBK) to tighten liquidity in the market by adjusting upwards the Central Bank Rate (CBR) and the Kenya Bankers Reference Rate (KBRR).
All eyes will now be on the next monetary policy committee meeting at the CBK on August 5, 2015 in light of a slowdown inflation figures. Kenya’s currency has lost 11.5 percent against the dollar this year and policy makers have warned there is a risk it could drive inflation higher.
The Central bank raised its benchmark lending rate by a total of 300 basis points since June and has a medium term inflation target range of between 2.5 percent and 7.5 percent.