Kenya’s annual inflation rate rose to 6.8% in September 2026 from 6.6% in August, remaining within the Central Bank of Kenya’s (CBK) target range of 2.5% to 7.5%, according to the Kenya National Bureau of Statistics (KNBS).
The increase means consumer prices were 6.8% higher in September 2026 than in the same month last year. According to KNBS, the main contributors to annual inflation were food and non-alcoholic beverages, transport, and housing, water, electricity, gas and other fuels.
Core inflation, which reflects underlying price pressures, increased from 3.4% in August to 4.0% in September, while non-core inflation declined from 14.7% to 14.0%.
The CBK attributed the moderation of inflationary pressures partly to government interventions, including subsidies and a temporary reduction in value-added tax (VAT) on fuel. These measures have helped cushion consumers against rising energy costs.
Despite the increase in inflation, the CBK maintained its Central Bank Rate (CBR) at 8.75% at its October 7, 2026, Monetary Policy Committee meeting. The decision followed an earlier meeting in August at which the rate was also left unchanged.
The central bank said its monetary policy stance remained appropriate for keeping inflation expectations within the target range, maintaining exchange-rate stability and supporting economic growth.
The CBK also revised its 2026 economic growth forecast upwards to 5.0%, from 4.9% previously. The improved outlook reflects stronger performance in the industry and services sectors. The bank projects that the economy will grow by 5.3% in 2027.
Kenya’s economy expanded by 5.3% in the first quarter of 2026, according to official economic data. However, the full-year growth outlook remains subject to domestic and external risks.
The CBK has warned that the El Niño weather phenomenon could affect economic activity in Kenya and other countries in the region. Adverse weather conditions could disrupt agricultural production, affecting food supplies and prices.
Geopolitical tensions in the Middle East and the resulting pressure on global oil prices also pose a risk to the economic outlook. Higher fuel costs could increase transport and production expenses, putting additional pressure on inflation and household purchasing power.
Meanwhile, Kenya’s foreign-exchange reserves stood at US$14.93 billion in early October, equivalent to 6.1 months of import cover, according to the figures cited in the central bank data. The Kenyan shilling also remained broadly stable against the US dollar.
Overall, Kenya’s economic outlook remains cautiously positive, supported by inflation within the central bank’s target range and a slightly improved growth forecast. However, rising underlying inflationary pressures, global oil-price volatility and the possibility of weather-related disruptions could complicate the outlook in the coming months.
The key challenge for policymakers will be to contain inflation while sustaining economic growth. Whether government interventions and the current monetary policy stance can achieve both objectives will depend partly on developments in global energy markets, domestic food supplies and broader economic activity.
– John Murunga
