Kenya’s National Bureau of Statistics (KNBS) will start providing core inflation data to improve the efficiency of monetary policy choices. Previously, KNBS concentrated on headline inflation, which includes volatile components such as food and petrol. This caused the Central Bank of Kenya (CBK) to compute non-food and non-fuel inflation separately in order to have a better understanding of underlying inflation patterns.
Core inflation, which removes volatile elements like food and energy prices, is a more reliable indicator of long-term inflationary pressures. KNBS emphasised the need of having an official and comprehensive core inflation indicator in line with worldwide central banking norms. Policymakers argue that maintaining price stability is difficult when headline inflation is caused by supply-side variables such as bad weather, which monetary tools cannot influence.
The change is designed to improve economic forecasts, assist the CBK in making appropriate interest rate decisions, and address disparities in inflation data between the KNBS and the central bank.
This move intends to promote transparency, maintain economic stability, and foster informed public communication about inflation, ultimately bringing Kenya’s inflation reporting in line with international standards.
