Kenyan households are beginning to experience relief as the cost of living declines following a substantial drop in the country’s inflation rate, this is according to a report released on Thursday by Treasury Cabinet Secretary John Mbadi.
The report indicates the year-on-year inflation rate fell to 3.5% in February 2025, down from 6.3% in February 2024, resulting in notable declines in the prices of essential food commodities, fuel, and electricity.
This decline in inflation has been attributed to several factors, including prudent government interventions, a stable exchange rate, increased agricultural output, and a reduction in fuel and electricity prices.
Notably, the price of a kilogram of maize grain decreased by 8.7% from KSh 68.67 in February 2024 to KSh 62.68 in February 2025.
Similarly, a 2-kilogram packet of sifted maize flour now costs KSh 143.10, reflecting a 7.4% drop from KSh 154.54 in the previous year.
Other significant price reductions include:
Wheat flour (2kg): Dropped by 17.5% to KSh 165.29.
Sugar (1kg): Reduced by 16.8% to KSh 166.45.
Kerosene (1 litre): Declined by 21.5% to KSh 152.18.
Petrol (1 litre): Fell by 14.4% to KSh 177.25.
Diesel (1 litre): Reduced by 14.5% to KSh 167.84.
Electricity (200 KWH): Decreased by 16.6% to KSh 5,634.92.
However, the CS also notes that not all prices declined. The price of edible oil, for instance, rose by 5%, increasing from KSh 333.31 to KSh 350.10 per litre. Despite this, the overall trend suggests that most essential goods have become more affordable.
Regional Price Variations
While the impact of inflation reduction has been felt nationwide, it has not been uniform across all regions as the report indicates.
A breakdown of price changes by region shows that while some areas have experienced significant declines, others have seen price increments in specific commodities.
For example, North Eastern Kenya experienced an increase in maize grain prices by 19.5%, rising from KSh 105.63 to KSh 126.25 per kilogram.
Similarly, a 1kg packet of maize flour in the region rose by 10.1% to KSh 126.67. These increases contrast with price reductions recorded in other regions, such as Central and Nyanza, where staple food prices declined significantly.
However, in general, North Eastern region recorded the highest drop of Ksh 51.84 from KShs 206.7 in February 2024.
The price of sugar, for instance, dropped by over 25% in North Eastern, while kerosene saw a notable decline of more than 20% across all surveyed regions.
“The price of a litre of Kerosine in the selected regions reduced by over 20%. The largest reduction was registered in the coast region, which registered a decline of Kshs 41.9 from kshs 190.6 in February 2024,” Mbadi’s statement notes.
The Treasury attributes the improved cost of living to a series of measures aimed at stabilizing the economy and boosting production.
As the CS reports, these initiatives are:
1. Prudent Monetary Policy Measures
The Central Bank of Kenya (CBK) has strengthened the exchange rate and reducing lending rates.
The Kenyan shilling also strengthened to KSh 129.4 against the U.S. dollar in January 2025, down from KSh 160.8 a year earlier.
This has helped curb imported inflation, particularly for fuel and raw materials used in food production. Additionally, CBK lowered the Central Bank Rate (CBR) from 13% in August 2024 to 10.75% in February 2025, making borrowing cheaper and encouraging investment.
“With the easing of CBR to 10.75% in February 2025 and reduction in the Cash Ratio Requirement to 3.25% from 4.25%, commercial banks have this week demonstrated lowering of interest rates with higher percentages. Several banks have already reduced their base lending rates – e.g. Coop Bank from 16.5% to 14.5% and KCB from 15.6% to 14.6%, Equity from 17.3% to 14.3% among others such as ABSA, NCBA. It is expected that more banks will follow suit,” the government indicates.
2. Agricultural Production and Food Supply
To lower the cost of food, the government provided production subsidies, particularly in fertilizer and seeds.
This led to increased maize production, which rose from 61 million 50kg bags in 2023 to 95 million in 2024. Similarly, wheat production increased to 10 million bags, while sugar production nearly doubled from 472,773 metric tonnes in 2023 to 815,454 metric tonnes in 2024.
3. Appreciation and Stabilization of the KSh
The appreciation of the Kenyan shilling contributed to reduced fuel prices, as well as lower electricity costs, benefiting both households and businesses.
4. Expansion of Credit and Funding
The Hustler Fund played a crucial role in improving financial access, with a total of KSh 60 billion disbursed since its launch. This has helped small businesses grow and cushioned many from predatory lenders.
5. Social Protection Measures
The Inua Jamii cash transfer program has been expanded, with KSh 3.52 billion disbursed to 1.76 million households in February 2025 alone. This program supports orphans, vulnerable children, older persons, and persons with disabilities.
Lastly, the CS further highlighted the government was working on settling outstanding payments owed to businesses, with KSh 206 billion earmarked for immediate payment out of the total pending bills exceeding KSh 660 billion.
“Settlement of pending bills will ensure suppliers and contractors continue to offer service delivery and support job retention objectives. Payment of pending bills will inject the much-needed liquidity into the economy,” the report says.
By Kenyans