Kenyan inflation dips in September, dampens chances of rate hike Re

NAIROBI, KENYA: Price inflation in Kenya fell to 6.60 percent in the year to September from 8.36 percent in the previous month, the statistics office said on Monday, making it less likely that the central bank will lift interest rates in coming months. The year-on-year inflation rate came in within the central bank's preferred medium term range of 2.5 to 7.5 percent and also below the Reuters consensus forecast of 7.24 percent. Analysts had predicted the rate could come down on the back of base effects because there had been a jump in the price of most commodities in September last year due to a new sales tax. The central bank's Monetary Policy Committee (MPC) held its key lending rate at 8.50 percent earlier this month, saying there was no fundamental pressure on inflation even though it had risen to 8.36 percent, its highest level since June 2012. The central bank is due to meet again in November but the decline in inflation makes it more likely that it will hold interest rates in steady in the coming months. "I think it validates the MPC's decision not to do anything the last time round and not to be panicked into a decision. I think the sharp fall in the rate of inflation is all about the price of oil and I think the MPC had visibility on that forward price," said Aly Khan Satchu, independent analyst. "I think the MPC will do nothing through the year. There will be no change throughout 2014." The statistics office said the housing, water, electricity, gas and other fuels' price index fell last month by 0.52 percent due to lower costs for kerosene and electricity.