The Central Bank of Kenya says overall inflation declined to 3.6 per cent last month from 4.4 in August, largely on account of a significant decrease in fuel inflation. According to CBK, fuel inflation declined to 1.1 per cent from 4.7 per cent in August, mainly driven by decreases in pump, electricity, and cooking gas/LPG prices.
Moreover, food inflation declined to 5.1 per cent from 5.3 per cent in August, reflecting a decline in vegetable inflation, while non-food-non-fuel inflation decreased to 3.4 per cent in September from 3.5 per cent in August. It adds that gross domestic product growth decelerated to 4.6 per cent in the second quarter of 2024 from 5.6 per cent in a similar quarter of 2023. The slowdown was reflected across all sectors of the economy except manufacturing, wholesale and retail trade, health, and professional services. The agriculture sector grew by 4.8 per cent compared to 7.8 per cent in a similar quarter of 2023.
The services sector recorded a growth of 5.5 per cent compared to 6.8 per cent and contributed 3.1 percentage points to real GDP. The industrial sector growth decelerated to 0.6 per cent from 1.4 per cent in the second quarter of 2023.
The Kenya Shilling remained stable against major international and regional currencies during the week ending October 3. It exchanged at Sh 129.19 per US dollar on October 3, compared to Ksh 129.19 on September 26 (Table 2). Foreign Exchange Reserves The usable foreign exchange reserves remained adequate at USD 8,186 million (4.2 months of import cover) as of October 3.
The CBK says this meets its statutory requirement to endeavour to maintain at least 4 months of import cover (Table 3). Money Market Liquidity in the money market remained adequate during the week ending October 3, supported by open market operations. Commercial banks’ excess reserves stood at Ksh 21.0 billion about the 4.25 per cent cash reserves requirement (CRR).
The average interbank rate was 12.71 per cent on October 3 compared to 12.70 per cent on September 26. During the week, the average number of interbank deals decreased to 33 from 45 in the previous week, while the average value traded decreased to KSh 17.4 billion from KSh 26.7 billion in the previous week.
