Kenya’s inflation rose for a second month in August 2025, reaching 4.5% from 4.1% in July—a 14-month high—just weeks after the Central Bank of Kenya (CBK) implemented its seventh straight rate cut.
On August 12, the CBK lowered its benchmark lending rate by 25 basis points to 9.5%, the lowest in two years, saying inflation was still comfortably within its target band of 2.5% to 7.5%, leaving room for further monetary easing.
The series of cuts, which began in August last year, has reduced the policy rate by a cumulative 325 basis points from 12.75%. The latest uptick in consumer prices marks the second straight month of increase and the highest annual reading since July 2024, when inflation stood at 6.2%.
“The price increase was primarily driven by a rise in prices of items in the Food and Non-Alcoholic Beverages (8.3%); Transport (4.4%); and Housing, Water, Electricity, Gas and Other Fuels (0.8%) over the one-year period,” the Kenya National Bureau of Statistics (KNBS) said in its August report.
Together, these categories account for over 57% of the consumer basket.
Mixed movements in food and transport prices
Food inflation rose by 0.6% month-on-month while transport costs increased 0.5%, the steepest gains of the period.
Cabbages led the rise among vegetables, climbing 6.3%, followed by carrots at 2.4%, collard greens at 1.9% and tomatoes at 1.2%. Wheat flour, onions and leeks rose 0.9%, while potatoes were up 0.7%.
At the same time, prices of unpacketed cow milk, beans, oranges and maize flour recorded declines.
Transport inflation also reflected sharp increases in fares despite lower fuel costs. Petrol prices fell by 0.5% and diesel was unchanged, but the bus fare on the Mombasa–Nairobi route jumped 15.4%, while local tricycle fares rose 1.5%.
Core inflation eases slightly
Core inflation, which excludes volatile food and fuel prices, edged lower to 3% from 3.1% in July.
KNBS said its contribution to overall inflation held steady at 2.8 points, compared with 1.7 points from non-core inflation. “Food and non-alcoholic beverages contributed 2.7 points to the overall inflation.”
Although headline inflation is anchored within target, the renewed upward momentum underscores the tightrope policymakers must walk between stimulating growth and keeping price pressures in check.
