Kenya inflation seen easing slightly in April

Kenya’s year-on-year inflation rate which has fallen for four consecutive months could ease further in April on a drop in food prices, but a sharp fuel price increase could prevent this, a Reuters survey showed.

Monday, April 30, 2012

Kenya’s year-on-year inflation rate which has fallen for four consecutive months could ease further in April on a drop in food prices, but a sharp fuel price increase could prevent this, a Reuters survey showed.A drop in inflation may give more justification for the central bank to start easing its benchmark lending rate at its next meeting next Thursday, after the expected release if the inflation statistics on Monday.The consensus forecast in a survey of seven analysts was for inflation in east Africa’s largest economy to slow down to 15.00 percent from 15.61 percent in March, the lowest since July 2011.Inflation hit nearly 20 percent in November, prompting the central bank to raise its benchmark lending rate by a surprise 150 basis points to 18 percent.The central bank was slammed for waiting too long to respond to surging prices and the Kenyan shilling fell through a series of record lows against the dollar in the country which plans to hold its elections in March next year, when election spending is expected to put pressure on prices.Kenya’s energy regulator raised the prices of diesel, petrol and kerosene during its mid-monthly review, citing higher international crude oil costs."There may be a slowdown in inflation. However the fuel (price) increases will negate any gains,” Duncan Kinuthia, head of trading at Commercial Bank of Africa, said. He said the rains could see food inflation ease."Power bills may also remain within acceptable ranges as reliance on thermal power may reduce and more emphasis on hydro generation as well as geothermal.” Sudanese President Omar Hassan al-Bashir declared a state of emergency in some areas bordering South Sudan, a state-linked media website said on Sunday.The Sudanese Media Centre said Bashir’s decree covered some areas of South Kordofan, White Nile and Sinnar provinces. It did not give further details.