Kenya inflation seen down for 10th month in row

Wed Sep 26, 2012 11:57am GMT

By Kevin Mwanza

NAIROBI (Reuters) - Kenya's inflation is expected to fall for the tenth month in a row in September to 5.40 percent as lower food prices offset upward pressure from a jump in retail fuel prices, a Reuters poll showed on Wednesday.

Respondents said the rate, which has been falling since the end of 2011, giving policymakers room to cut lending rates and shore up economic growth, could be close to bottoming out as the favourable base effects draw to a close.

The poll of 11 analysts forecast the year-on-year rate of inflation would fall to a median estimate of 5.40 percent, down from 6.09 percent in August.

The data is due out on September 28.

"Food disinflation will likely remain pronounced, perhaps even countering any upside pressures that may emanate from increases in fuel prices," said Phumelele Mbiyo, regional head of research at CFC Stanbic bank.

Kenya's Energy Regulatory Commission raised the maximum prices of petrol, diesel and kerosene during its monthly review in the middle of this month, citing higher prices of crude oil in global markets.

The lowest forecast was 4.50 percent with one respondent saying inflation had bottomed out and was likely to edge up to 6.15 percent.

Bank of Africa trader Peter Mutuku, who predicted a marginal rise in the rate, attributed the view to a combination of a potential jump in borrowing as rates fall and the higher energy costs.   Continued...

A customer uses a petrol nozzle to fill up his tank in a gas station in Nice August 27, 2012. REUTERS/Eric Gaillard
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