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Kenya's inflation rises marginally in June

01 July 2014, 21:47

Nairobi - Kenya's overall monthly inflation increased slightly to 7.39 percent in June from 7.30 percent in the previous month despite the fall in prices of several commodities, the statistics bureau said on Monday.

The National Bureau of Statistics said the Consumer Price Index (CPI) computed using the geometric mean approach increased by 0.14 percent from 149.70 in May to 149.91 in June.

"During the review period, Food and Non-Alcoholic Drinks' Index decreased by 0.26 percent. This fall was mainly due to the observed decrease in the prices of several food commodities which outweighed the price of rises in other food items," the bureau said.

"Similarly, the Alcoholic Drinks, Tobacco and Narcotics index also dropped, mainly due to falls in the prices of khat (miraa)," it said.

According to the bureau, between May and June, the Housing, Water, Electricity, Gas and Other Fuels' Index increased by 0.70 percent mainly due to increase in prices of kerosene, charcoal, electricity and rent.

"Over the same period, the Transport Index increased by 0.35 percent due to rise in cost of public transport and diesel which is commonly used by the buses and minibus operators.

The move comes after the government concluded sale of two billion U.S. dollars which will be used to fund infrastructure projects in the country and thus lower inflation and bank's interest rates.

Last week, President Uhuru Kenyatta said the bond is expected to have a positive impact on the country's inflation rate. Old Mutual Asset Managers Investment Analyst, Carolyne Kiragu said there is no significant material risk that would cause the core inflation to rise in 2014.

Kenyatta also said the central bank will set credit interest rates that will be used by all banks, adding that this will facilitate ease of availability of funds even as the government works to facilitate lines of credit for housing projects aimed at low income earners.

He said the good returns from the bond were an indication that the world has confidence in the economy.

More than 65 percent of the bonds were bought by U.S. investors while the second in rank were British investors at between 15 to 16 per cent, demonstrating how international partners have lined up support for the country's development agenda.

The bonds are already trading at the Irish Stock exchange at 102 percent which shows more confidence by investors in the economy. Rwanda and Nigeria are some of the African countries that have already floated a Eurobond in 2012.

 - Xinhua


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