August inflation fell to 6.06% from the 7.74% in July, according to data released by the Kenya Bureau of Statistics. This marks another significant drop of the very crucial economic performance indicator.
Early this year, the rate was way above 15% ranging between 16% and 19%. The effect was an interest rates hike which saw treasury bills earn returns of as much as 20%. Commercial banks and mortgage firms were not left behind too in this interest rates uprising. They also hiked up their rates and we ended up with what I could call a “fermenting economy”.
People who had mortgage loans to repay felt the pinch most with their monthly installments almost doubling. Commercial banks also had to look for ways of mitigating the rising cost of capital, but bottom line, they also shot up their interest rates on loans. Borrowing has never been painful as it was during those times. Every body felt it severely; I mean the common mwananchi!
Then CBK came into the scene to try and calm down the swelling interest waves. To many analysts, there reaction was seen to be coming too late in the day, but as fate could have it, their monetary policy stance of maintaining the CBR at 18% for about six months seemed to work. Interest rates started falling following decline in inflation rates and the economic grotesque was gaining some beautiful shape now (that is, as much as the figures could show).
Back then oil prices were very high with a barrel going for more than $130. This has changed too with a barrel going for less than $90 on average.
With the fall in inflation rates and oil prices, we could have expected to feel that change on the ground. But woe unto us helpless Kenyans, the heat is still baking us with the same intensity as back then when the economic figures read differently.
I still pay the same fare to and from town as then. I buy my loaf at the same inflated price as when the inflation was at 19%. I still buy my rice at the very same high price, buy my wheat flour at the same high prices and still buy my cooking oil at those “high-inflation-era” exaggerated prices.
Each month nowadays I here that inflation is going down, international oil prices are also headed south. Interest rates are also on the decline with the CBR having come down to 16.5% from the 18% stance it had held there before. But my life as a Kenyan has not changed. My living standards have not improved and neither has my bills responded positively.
Banks are reluctant to lower their interest rates even after CBK lowered the CBR. Commodity prices have remained stuck up there very high beyond the reach of many poor Kenyans. We still suffer the same way we used to when inflation was very high and oil prices were at the roof tops. Then you come with some funny figures and tell us to rejoice that inflation is dropping?
If the feared 2013 global recession is indeed a fact, then, the inflation figures only bring chills to my bones. I just wonder; if they are as low as they claim and I am suffering the much I am doing, what about in 2013 when the recession actualizes?