Kenya Inflation Rises to 6.8% as Central Bank Lifts Growth Forecast to 5.0%

Kenya’s annual inflation climbed to 6.8 per cent in September 2026, up from 6.6 per cent in August, according to the Kenya National Bureau of Statistics (KNBS). The rise means consumer prices were 6.8 per cent higher in September than a year earlier and remain inside the Central Bank of Kenya’s (CBK) target band of 2.5 to 7.5 per cent.

KNBS identified food and non-alcoholic beverages, transport and housing, water, electricity, gas and other fuels as the chief drivers of the year-on-year increase. Core inflation, which measures underlying price pressures, rose to 4.0 per cent from 3.4 per cent in August, while non-core inflation fell to 14.0 per cent from 14.7 per cent.

The CBK said the easing of inflationary pressure was helped by government actions such as subsidies and a temporary cut to value-added tax on fuel, which have softened the impact of higher energy costs on households.

At its Monetary Policy Committee meeting on October 7, 2026, the CBK left the Central Bank Rate unchanged at 8.75 per cent, a decision that mirrored the August meeting. The bank explained that its policy stance remained suitable for anchoring inflation expectations within the target range, preserving exchange-rate stability and backing economic growth.

The central bank also lifted its 2026 economic growth projection to 5.0 per cent from 4.9 per cent and forecast a 5.3 per cent expansion in 2027, citing stronger performance in industry and services. Official data show the economy grew by 5.3 per cent in the first quarter of 2026.

The CBK warned that the El Niño weather pattern could disrupt agricultural output and food prices, while geopolitical tensions in the Middle East could push global oil prices higher, raising transport and production costs and adding pressure on inflation and household purchasing power.

Early October data indicate Kenya’s foreign-exchange reserves totalled US$14.93 billion, providing about 6.1 months of import cover, and the Kenyan shilling remained broadly stable against the US dollar.

Overall, the outlook is cautiously positive with inflation staying within the target range and a modestly higher growth forecast, but rising core inflation, oil-price volatility and potential weather-related shocks could complicate the outlook in the months ahead.