World’s Best-Performing Currency Fails to Slow Kenyan Inflation

(Bloomberg) -- Kenya’s annual inflation rate climbed for a second successive month in December as higher food and transport costs offset the effects of the shilling’s world-beating performance this year.

The consumer price index rose 3%, compared with a 2.8% increase in November, the Nairobi-based Kenya National Bureau of Statistics said in an emailed statement Tuesday. Prices advanced 0.6% in the month.

Inflation remains at the lower end of the target range of 2.5% to 7.5% in which central bank Governor Kamau Thugge prefers to anchor price-growth expectations. Earlier this month, the bank slashed its benchmark interest rate for the third time in a row — lowering it to 11.25% from 12% — as muted inflation allows it to offer support to the East African economy.

Price-growth has been subdued by the shilling, the world’s best-performing currency against the dollar this year after it gained about 21% against the greenback since the end of 2023. The Kenyan unit’s strength has helped slash import costs of raw materials and finished goods, including fuel.

Key Insights

(Updates with detailed price increases in bullet points)