Kenya’s inflation holds near 30-month high as transport and food costs squeeze households

Kenya’s annual inflation rose to 6.5 per cent in July 2026, from 6.4 per cent in June, as higher food and transport costs continued to put pressure on households. The latest reading means the overall price level was 6.5 per cent higher in July than in the same month last year, according to the Kenya National Bureau of Statistics (KNBS).

For consumers, however, the headline 6.5 per cent figure does not tell the whole story. The biggest pressures were concentrated in categories that account for a large share of household spending. Food and non-alcoholic beverages rose 9.0 per cent over the year, while transport prices increased 15.6 per cent. Housing, water, electricity, gas and other fuels rose 3.2 per cent.

Together, the three categories account for more than 57 per cent of the weight of Kenya’s 13 major expenditure divisions used to calculate the Consumer Price Index (CPI).

That means households whose budgets are heavily exposed to transport and food can experience a much sharper rise in their living costs than the headline inflation rate suggests.

Inflation has risen sharply since January

The July reading marks a significant change from the start of the year.

Annual inflation stood at 4.4 per cent in January, eased to 4.3 per cent in February and returned to 4.4 per cent in March. It then accelerated to 5.6 per cent in April and reached 6.7 per cent in May before easing to 6.4 per cent in June and rising slightly to 6.5 per cent in July.

From January to July, annual inflation therefore increased by 2.1 percentage points.

May remains the highest annual inflation reading recorded so far this year, at 6.7 per cent. At the time, food and non-alcoholic beverages had risen 9.4 per cent while transport increased 16.5 per cent.

Although the headline rate has eased from the May peak, the July figures show that price pressures remain particularly strong in essential areas of household spending.

Transport remains the biggest pressure point

Transport recorded the highest annual inflation among the 13 major spending divisions in July, with prices 15.6 per cent higher than a year earlier.

The rate has nevertheless been declining from its May peak. Transport inflation fell from 16.5 per cent in May to 16.1 per cent in June and 15.6 per cent in July.

The slowdown is important, but it should not be confused with a fall in transport prices. A 15.6 per cent annual inflation rate means transport prices were still substantially higher in July than they were a year earlier.

The impact also extends beyond commuters. Transport is an input into the movement of agricultural produce from farms to markets, manufactured goods from factories to shops and imported products through the supply chain. Sustained transport-cost pressure can therefore feed into the prices of other goods and services.

For households, the immediate concern is simpler: people who spend a significant share of their income on fares, fuel or other transport-related costs are likely to feel the effects more strongly than the headline inflation figure implies.

Food prices remain above overall inflation

Food and non-alcoholic beverages recorded annual inflation of 9.0 per cent in July, well above the overall 6.5 per cent rate. The category was also one of the main drivers of inflation identified by KNBS.

But a 9.0 per cent food inflation rate does not mean every food item became 9.0 per cent more expensive.

The CPI is based on a weighted basket of goods and services. Individual prices can move in different directions and at very different rates. KNBS’s monthly CPI reports, for example, show periods in which some vegetables and other food items rise sharply while other products decline.

This distinction matters to households because their personal inflation rate depends on what they actually buy.

A family that spends heavily on fresh vegetables, meat and other products whose prices have risen quickly may face a larger increase in its food bill than another household whose purchases are concentrated on items that have recorded smaller increases or price declines.

The 9.0 per cent figure should therefore be read as an average measure of price movements across the food and non-alcoholic beverages basket, rather than as a blanket increase applying to every item on the supermarket shelf or market stall.

Housing costs are rising more slowly—but not uniformly

The housing, water, electricity, gas and other fuels division recorded annual inflation of 3.2 per cent in July.

That is below headline inflation, but the division also contains several different household expenses whose prices can move in different directions. A household's experience can therefore differ depending on its electricity consumption, cooking fuel and other housing-related costs.

This is another reason why the headline inflation rate should not be interpreted as a precise measure of the increase in every household's monthly expenditure.

What happens next?

The key question for households and businesses is whether the easing in transport inflation will continue and whether food-price pressures will moderate.

The July data provide some evidence of improvement from the May peak, particularly in transport, but prices in the two most important pressure points remain well above the overall inflation rate. Food inflation at 9.0 per cent and transport inflation at 15.6 per cent continue to put pressure on household purchasing power.

The direction of these categories will therefore be important for the next inflation readings. A further slowdown in transport inflation would help ease pressure on household budgets and business costs. But renewed increases in food or transport prices could keep headline inflation elevated.

The inflation picture is unfolding alongside continued economic growth. Kenya’s real GDP expanded by 5.3 per cent in the first quarter of 2026, up from 4.9 per cent in the corresponding quarter of 2025, according to KNBS. Growth was recorded across all sectors, with particularly strong performances in accommodation and food services, mining and quarrying, construction, financial and insurance services, and information and communication.

That creates a more complicated economic picture: the economy is growing, but households are still facing significant increases in the cost of essential goods and services.

For consumers, the most important number may therefore not be the 6.5 per cent headline rate alone, but what happens next to the prices of the things they buy most often—especially food and transport.