Local food makers increased product prices by 11.26 per cent over the 12 months to March 2022, squeezing consumers’ envelopes.
Data by the Kenya National Bureau of Statistics (KNBS) released yesterday shows food producer price indices – which tracks changes in the cost of goods directly from manufacturer’s warehouses – grew by 5.67 per cent between December 2021 and March this year, and 11.26 per cent in the year to March.
Manufacturers have been hit by a sharp rise in the cost of primary food imports like maize and wheat due to shortages in the global market made worse by hitches arising from the Russia-Ukraine war.
Kenya increased its reliance on food imports last year as local production of crops was muted by unreliable rains.
According to the Economic Survey 2022, maize production declined by 12.8 per cent from 42.1 million bags in 2020 to 36.7 million in 2021.
Bean and wheat production fell by 14 per cent and 39.4 per cent to stand at 7.4 million bags and 245,300 tonnes respectively in the same period.
This has seen a sharp rise in maize flour, bread and milk, whose shortage is attributed to a drought that has lingered for months in most parts of the country.
The cost of textiles went up 15 per cent, piling pressure on the price of locally made clothes, while the cost of tobacco products rose up 17.11 per cent.
At the same time, the manufacturers raised prices of pharmaceutical products by 23.15 per cent, heavily affecting the cost of healthcare while producers of plastics raised prices by 7.2 per cent thus increasing the cost of packaging material.
“The mining and quarrying sector recorded the highest price increase at 26.3 per cent in March 2022, followed by manufacturing with a 12.4 per cent,” KNBS says in its report.
Local manufacturers have also been hit by a sharp rise in the cost of fuel. This has led to an increase in transport costs, piling pressure on producers to pass the extra cost to consumers.
High wholesale prices also come at a time the government has been accelerating revenue-raising measures by slapping higher taxes, especially on excisable products.
The National Treasury says tax receipts from the sale of excisable goods in March amounted to Sh65.25 billion against a target of Sh58.25 billion in the October-December 2021 period.
Kenya Revenue Authority reviews duty on excisable products like juice, water, beer and fuel every year in line with inflation. This means manufacturers increase prices for their products.
The high commodity prices have hit households hard, forcing some to increasingly rely on borrowing to meet short-term spending needs.
Just last week, Safaricom said Kenyans borrowed Sh502.6 billion in 12 months from its overdraft facility Fuliza.
