Consumer Price Index The overall annual rate of inflation, computed as a percentage of change in the consumer price index (CPI) over two consecutive 12 months periods, increased from 9.8 per cent in 2007 to 26.2 per cent in 2008. Table below shows annual inflation rates for the different income groups in Nairobi and the rest of urban areas over the last five years. In 2008, inflationary pressures were almost as twice as much for both the Nairobi lower income group and the rest of urban areas compared to the Nairobi middle/upper income category of the population The increase in overall inflation was mainly attributed to high food prices arising from the high cost of agricultural inputs, the post election violence that disrupted production and distribution of goods and services in the early part of 2008, the global economic turmoil and global food shortages. Underlying inflation which excludes food items from the CPI basket increased from 5.7 per cent in 2007 to 11.1 per cent in 2008. This was mainly due to high prices of petroleum products and electricity among other non-food items. Table 1. Inflation Rates, 2004-2008 Income Group 2004 2005 2006 2007 2008 Nairobi Lower Income Inflation 14.4 11.7 19.6 9.4 27.9 Nairobi Middle/Upper income inflation 8 10.1 6.5 7.1 14 Nairobi Inflation 13.2 11.4 17.3 9.1 25.7 Rest of Urban Towns Inflation 10.6 9.6 12.6 10.2 26.6 Kenya Inflation Rate 11.6 10.3 14.5 9.8 26.2 1. The Nairobi composite index is weighed as 0.8 for lower income group and 0.2 for middle/upper income group while Kenya composite index is weighed as 0.399 for Nairobi and 0.601 for the rest of Urban Towns. 2. The lowest income group comprises households with monthly expenditure below Ksh 10,000 in October 1997. 3. The middle/upper income group comprises households with monthly expenditure above Ksh 10,000 in October 1997
A five year series of the of the CPI for the Nairobi lower, middle/upper, Nairobi combined, rest of urban areas and the whole of Kenya combined. In general, relatively higher CPI which translated to higher inflation rates were recorded for all categories and for the months in 2008 compared to 2007. The annual average CPI for Nairobi lower income group rose from 240.85 in 2007 to 308.12 in 2008 giving rise to annual inflation of 27.9 per cent as shown in Table 4.19. In 2008, the highest CPI of 332.13 was recorded in December for this income group while the lowest of 285.03 was observed in January. The table 4.20 shows an average annual CPI of 179.13 in 2007 and 204.12 in 2008 for the Nairobi middle/upper income. This translates to an annual inflation of 14.0 per cent. The monthly CPI for this income group ranged from 191.28 in January to 212.35 in December. Table 2: Consumer Price Index for the Nairobi Lower Income Group, 2004-2008 Month of the Year 2004 2005 2006 2007 2008 January 149.8 176.87 220.63 237.69 285.03 February 153.41 180.15 232.47 241.18 285.29 March 156.08 184.38 232.81 241.85 297.92 April 187.91 189.36 226.3 235.04 302.98 May 160.08 189.43 219.93 233.01 315.39 June 161.71 184.63 209.83 236.97 307.63 July 161.54 183.01 206.44 238.74 305.37 August 173.48 182.68 209.63 239.69 307.23 September 177.75 179.99 215.39 241.81 314.78 October 178.35 181.9 221.38 242.36 318.53 November 173.26 186.1 219.33 245.81 325.14 December 173.62 190.29 226.83 256.09 332.13 average 164.75 184.07 220.08 240.85 308.12
Table 3: Consumer Price Indices, Nairobi Middle/Upper income Group, 2004-2008 Month of the Year 2004 2005 2006 2007 2008 January 136.11 152.76 165.64 174.48 191.28 February 137.24 153.63 168.19 176.19 194.06 March 137.9 154.46 168.75 174.53 196.37 April 138.5 157.48 169.19 174.51 199.97 May 139.71 157.55 167.39 174.94 205.61 June 142.64 158.22 164.42 176.66 204.95 July 142.1 157.13 162.95 177.68 204.25 August 145.35 157.64 165.74 179.45 205.79 September 147.93 158.25 167.24 184.21 209.14 October 149.43 158.81 168.12 185.19 211.62 November 147.99 158.8 168.85 185.39 214.08 December 146.79 159.7 169.99 186.32 212.35 Average 142.64 157.04 167.2 179.13 204.12 Table 4: Consumer Price Indices, Overall Nairobi, 2004-2008 January 147.06 172.05 209.64 225.05 266.28 February 150.18 174.84 219.61 228.18 267.04 March 152.45 178.4 220 228.38 277.61 April 154.03 182.99 214.88 222.93 282.38 May 156.01 183.05 209.42 221.39 293.43 June 157.9 179.35 200.74 224.91 287.09 July 157.65 177.83 197.74 226.53 285.15 August 167.85 177.67 200.85 227.64 286.94 September 171.79 175.64 205.76 230.29 293.65 October 172.57 177.28 210.73 230.93 297.15 November 168.21 180.64 209.23 233.73 302.93 December 168.25 184.17 215.46 242.14 308.18 Average 160.33 178.66 209.51 228.51 287.32
Table 4.22: Consumer Price Indices, Rest of Urban areas, 2004-2008 January 154.99 175.97 195.69 217.85 257.39 February 157.47 176.94 202.5 220.53 265.92 March 159.14 178.75 208.03 223.26 272.43 April 160.83 183.75 207.91 222.39 281.55 May 163.86 185.43 208.08 222.12 290.69 June 166.52 184.61 203.57 224.95 293.17 July 165.01 1833.33 200.7 226.6 287.6 August 169.13 181.89 201 224.56 288.8 September 172.21 181.86 203.19 226.74 291.86 October 173.92 181.53 206.24 229.37 294.2 November 173.83 182.83 208.18 232.99 301.04 December 174.75 185.85 213.12 238.26 305.01 Average 165.97 181.9 204.85 225.8 285.81 Table 5: Consumer Price Indices, Kenya, 2004-2008 January 151.83 174.41 201.25 220.72 260.94 February 154.56 176.1 209.33 223.59 266.37 March 156.47 178.61 212.8 225.3 274.49 April 158.12 183.45 210.69 222.61 281.88 May 160.73 184.48 208.62 221.83 291.79 June 163.08 182.51 202.45 224.93 290.75 July 162.07 181.14 199.52 226.57 286.62 August 168.62 180.21 200.94 225.79 288.06 September 172.04 179.38 204.22 228.16 292.57 October 173.38 179.83 208.04 229.99 295.38 November 171.59 181.96 208.6 233.28 301.79 December 172.16 185.18 214.05 239.81 306.28 Average 163.72 180.61 206.71 226.88 286.41
Table 4.24: CPI and Inflation by commodities, 2007 and 2008 Average Index 2007 Average Index 2008 Broad Item Group Weights (Percentage) % Change Food & Non- Alcoholic Drinks 50.5 281.84 381.19 35.3 Alcohol & Tobacco 2.97 185.24 212.33 14.3 Clothing & Footwear 9 126.98 133.65 5.3 Housing cost 11.74 164.1 174.43 6.3 Fuel & Power 4.18 293.63 356.76 21.5 Household Goods & Services 5.82 147.9 161.76 9.4 Health & Personal Care 1.59 196.81 217.78 10.7 Transport & Communication 5.75 200.48 236.86 18.1 Recreation & Education 6.02 156.65 166.94 6.6 Personal Goods & Services 2.45 139.83 150.36 7.5 Average of all items 100 226.88 286.41 26.24