Private sector firms have revised their inflation expectations upwards, signalling persistent concerns over fuel costs and supply-side pressures even as they expect overall price growth to remain within the Central Bank of Kenya (CBK)'s target range.
Findings from the latest CBK Market Perceptions Survey show businesses expect inflationary pressures to persist in the short-term, driven largely by rising fuel and energy costs.
The survey covered chief executives and senior officers from 400 private sector firms, including 37 commercial banks, 14 microfinance banks and 349 non-bank firms, among them 96 hotels.
According to the banking industry regulator, respondents raised their inflation expectations across the short, medium and longer-term horizons, while still expecting price hikes to remain within the official target band.
“Respondents generally expect inflationary pressures to persist over the next three months. About 90 percent of respondents identified higher fuel and energy prices as the main drivers of inflation,” said CBK.
“Rising fuel costs have increased transport, electricity, production and distribution expenses, exerting upward pressure on domestic prices. Furthermore, geopolitical tensions in the Middle East have contributed to higher freight and logistics costs, further feeding into domestic prices.”
The concerns come at a time when Kenya remains heavily dependent on imported petroleum products, making domestic prices vulnerable to movements in global oil markets.
Businesses expect inflation to remain slightly above five percent in July, reflecting what they described as the delayed impact of elevated global energy prices.
The findings mirror recent movements in Kenya's inflation rate, which has remained within the CBK's target range despite periodic increases in fuel and food prices.
Official data from the Kenya National Bureau of Statistics (KNBS) shows inflation has largely stayed below the midpoint of the target range in recent months, supported by exchange rate stability and relatively moderate food price increases.
