Inflation rises for Nairobi’s rich on luxurious imports
The upward drift in prices of fuel and luxurious imports exposed Nairobi’s rich families to the steepest inflation in July, the highest ever recorded this year, official data indicates.
The city’s upper income segment was the only class to record a rise in inflation as the lower and middle income portons experienced drops in sync with the national average.
Data from the Kenya National Bureau of Statistics (KNBS) shows that inflation for the wealthy homes rose to 2.95 per cent last month from 1.77 per cent in June and 2.05 per cent in January.
The differences in the inflation levels among income segments is linked to their different consumption habits, with the rich spending most of their income on utilities and transport while food takes the bulk of the poor’s budget.
“The upper class homes depend heavily on imported goods such as fuel which have been affected by the exchange rates,” said James Gatungu, director of production statistics at KNBS.
He said the cost of luxury imported goods had increased due to the weakening shilling against the US dollar, piling pressure on rich households who buy them more.
The shilling has been trading at three-year lows in recent months due to falling hard currency revenues from tourism, tea and horticulture — the key foreign exchange earners — amid a rising import bill.
The energy regulator last month raised the maximum fuel prices to the highest level this year due to the weak shilling, squeezing rich homes who spend the largest share of their monthly income on transport at 27.9 per cent.
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SOURCE: Business Daily