Here are our views on the news making headlines today for Kenya:
A spike in Kenyan food prices due to dry weather conditions helped lift inflation to above the consensus expectation, official data showed on Thursday last week. The Kenya National Bureau of Statistics (KNBS) said in a statement that inflation rose to 7.08 percent year-on-year in April from 6.31 percent in the previous month. The central bank has a medium term inflation target range of between 2.5 percent and 7.5 percent.
Our View: We expect the inflation rate to maintain at high levels driven by the weakening shilling. The shilling has devalued by 4.4% since January this year driven by increased dollar demand globally. Moreover, the fall in the international oil prices dimmed the exploration sector outlook which resulted to a reduction in FDIs. This along potential capital flight with heightened expectations of a rise in U.S interest rates will continue to hurt the shilling hence high inflation levels going forward.