Households face fresh food price pressures in the coming months due to prolonged dry weather and the US-Israel-Iran war, which threaten supplies and increase transport costs, according to findings from the latest Central Bank of Kenya (CBK) survey on the agriculture sector.
About 466 farmers, wholesalers and retailers interviewed in a September survey identified milk, maize flour, wheat flour and cooking oil among commodities facing renewed upward price pressure.
The respondents, drawn from agricultural production and food markets, raised concerns about supply shortages in key food-producing areas and the conflict’s impact on global oil prices and shipping costs.
The survey found that the proportion of respondents expecting sifted maize flour prices to increase the following month rose to 40 percent in September from 19 per cent a month earlier.
About two-thirds, or 67 percent, of surveyed firms expected fresh unpacketed milk prices to rise, compared with 11 percent in August.
‘Respondents identified weather conditions (97 percent), transport costs (92 per cent), input prices (80 percent) and distance to market/product availability (71 percent) as important determinants of current price dynamics,’ CBK officials wrote in the report.
The responses reflect perceived price pressures rather than a national census of retail prices.
The findings point to a combination of domestic supply constraints and international cost pressures that could complicate efforts to ease the cost of living, particularly for families spending a large share of their income on basic food items.
Expectations of rising prices for white wheat flour climbed from 29 percent to 48 percent, while those for sugar increased from 15 percent to 28 percent.
The CBK said monthly price increases in September were more pronounced for milk products, wheat flour and edible oils, reflecting ‘the impact of the prolonged dry weather conditions in some key food basket areas, and the adverse impact of the escalation of the Middle East conflict on global supply chains’.
The Kenya National Bureau of Statistics reported that average prices of food and non-alcoholic drinks rose by 9.5 percent in September year on year.
Households paid an average of Sh61.23 for 500 millilitres of fresh packeted milk in September, compared with Sh55.97 a year earlier.
Fresh unpacketed milk cost Sh77.54 per litre, up from Sh72 over the same period.
White wheat flour averaged Sh181.11 for a two-kilogramme packet, up from Sh169.43 a year earlier, while cooking oil reached Sh359.36 per litre, compared with Sh342.99.
More than half of respondents (52 percent) told the CBK, which is tasked with maintaining price stability, that the US-Israel-Iran war had significantly affected retail prices through higher global oil prices.
The conflict has disrupted shipping around the Strait of Hormuz, affecting global supply chains and the movement of commodities, including petroleum products.
The CBK report says 58 percent of respondents attributed some consumer price increases to global supply-chain disruptions.
Higher oil prices increase food transport costs, while more expensive farm inputs raise production costs and eventually feed through to retail prices.
Weather-related supply concerns were also evident in fresh produce. Prices of cabbages, unpeeled garden peas, green maize and loose maize grain rose in September, while those of spinach, tomatoes and onions moderated.
Near-term inflation expectations also strengthened, with the share of respondents expecting inflation to rise in the following month reaching 64 percent in September, compared with 53 percent in August.
About 76 percent of respondents expected better harvests in the coming year, provided the forecast October-to-December rainy season delivers above-average rainfall.