Inflation Holds at 4.6% in October as Central Bank Eases Rate

By Chemtai Kirui | NAIROBI,

 

The annual inflation rate in the country has remained unchanged at 4.6% in October, the same level as in September, according to data released Friday by the Kenya National Bureau of Statistics (KNBS).

 

The monthly inflation rate, which measures the percentage change in the cost of a standard basket of goods and services from one month to the next, rose by 0.2% during the month.

 

 

The report inside the KNBS’ October 2025 Consumer Price Index and Inflation Report, released on October 31, also indicated that the Central Bank of Kenya (CBK) has eased its benchmark lending rate, cutting it from 9.50% to 9.25%, a move signaling confidence in price stability and aimed at supporting credit growth without triggering inflationary pressures.

 

Food and non-alcoholic beverages, which make up a significant share of household budgets, rose 8.0% year-on-year, driven by higher prices of cereals, onions, and cabbages. However, the price of maize flour fell by about 2.3%, offering some relief to households. Transport costs were up 4.8%, while housing, water, electricity, gas and other fuels increased 1.9%, KNBS said.

 

The cost of electricity also edged higher, with 200kWh consumption rising from KSh 5,597 in September to KSh 5,764 in October, while 50kWh consumption rose from KSh 1,274 to KSh 1,316.

 

Core inflation, which excludes volatile food and energy items, eased slightly to 2.7%, suggesting that underlying price pressures remain subdued.

 

Speaking after the data release, Central Bank Governor Kamau Thugge said the rate cut reflects the bank’s “balanced view” of stable prices and moderate growth.

 

“With inflation stable and risks of overheating limited, we believe conditions allow for measured easing to support economic activity,” said Dr. Thugge.

 

Business leaders welcomed the decision, noting that lower borrowing costs could spur investment in key productive sectors such as manufacturing, agro-processing, and services.

 

“This is the right time for productive sectors to scale up,” said Anne Munene, chief executive of a Nairobi-based manufacturing firm.

 

However, economists cautioned that structural challenges — including the high cost of credit, weak infrastructure, and external price shocks — could slow progress.

 

“While the inflation backdrop is positive, structural issues such as weak infrastructure, high cost of credit and external shocks could quickly reverse the gains,” said James Shikwati of the Centre for Development Studies.

 

What this means

The stable inflation means prices of everyday items such as maize flour, cooking oil, and fuel have largely remained steady, easing household pressure after months of price volatility. However, the Central Bank’s rate cut may take time to trickle down, as banks are unlikely to lower lending rates immediately — meaning loans and mortgages may not feel cheaper right away.

 

The country’s economy is projected to grow by 4.0%–5.0% this year, according to the Bank for International Settlements, slightly above the sub-Saharan Africa average.

 

CBK said it will continue to monitor global oil prices, exchange-rate movements, and domestic food supply constraints, warning that any renewed price pressures may require a policy response.