The Central Bank of Kenya (CBK) has kept the benchmark rate unchanged at 10.5pc in the hope that harvest season will improve supply to ease rising food inflation.
While the overall inflation is expected to remain within target, the Monetary Policy Committee (MPC) of the banking regulator said on Tuesday that non-food-non-fuel inflation which was stable at 3.7pc in August and September was expected to decline as underlying inflationary pressures abate.
“Kenya’s overall inflation remained broadly unchanged at 6.8pc in September 2023, compared to 6.7pc in August, which is within the government’s target range. Food inflation increased to 7.9pc in September from 7.5pc in August,” said MPC.
Food inflation drivers were increases in the prices of onions, Irish potatoes, cabbages, spinach, kales (sukuma wiki), and tomatoes.
The committee also noted a rise in bad loans as the ratio of gross non-performing loans (NPLs) to gross loans stood at 15pc in August 2023 compared to 14.2pc in August 2022.
“Increases in NPLs were noted in the manufacturing, mining and quarrying, real estate, and building and construction sectors. Banks have continued to make adequate provisions for the NPLs,” said the regulator.