Kenyans in rural areas face the highest cost of living

As the entire country feels the heat of a rising cost of living, sharper consumer prices have hit out at low-income earners and Kenyans in rural areas. This is according to a new analysis on overall inflation by income Groups in Nairobi and overall inflation by region with data provided by the Kenya National Bureau of Statistics (KNBS). In January for instance, overall inflation among households in the upper-income category in Nairobi stood at 2.91 per cent in contrast to 3.11 per cent for middle-income households in the City and 5.7 per cent for lower-income earners. In contrast, inflation for the rest of Kenya stood at an average 6.48 per cent against a national mean of 5.69 per cent. According to Genghis Capital Head of Research Churchill Ogutu, the discrepancy in the rate of inflation largely stems from the weighting of key consumer expenditures across income classes and regions. For instance, food costs account for a higher 36.3 per cent of total spending by households in Nairobi’s lower-income bracket according to the KNBS Consumer Price Index Re-basing Report published in March last year. This is as food costs in regions outside Nairobi represent 35.48 per cent of spending. In contrast, food costs only account for 21.65 per cent and 16.81 per cent of total spending by middle and upper-income households. A similar trend is visible in the trend of household expenditures on energy and transport. Nairobi’s lower-income class is represented by households whose spending sits at or below Ksh.46,355 per month while middle-income spenders have expenditures stretching to Ksh.184.394 with expenditures beyond the mark representing the upper-income class. With food costs rising in recent months, this means that households in lower incomes and in the rural areas are feeling the heat of constrained disposable income. “For a low-income household, a large portion of income goes into purchasing food and this becomes quite significant in the case of rising costs for the commodity which has a detrimental effect to low-income households,” said Mr. Ogutu. Moreover, 14F Consulting Group Business and Economic Analyst David King’oo says logistics costs are further bundled in the cost of key commodities upcountry. “The cost of transportation and food production is much higher in Mashinani. Input costs in agriculture even for a subsistence producer might, for instance, be as high as making purchases of the same food from a store,” he said. “Income opportunities for those in rural areas are slightly limited than in urban areas. Some households are for instance depending on cash transfers from relatives in cities.” Citizen Digital sought to find out differences in consumer costs between regions picking a three-item basket that included a two-kilogram pack of sifted maize flour, 400 grams white bread and a 500 millilitre packet of milk. In Nairobi, the pack of maize flour averages to Ksh.100, white bread at Ksh.49 and the milk packet at Ksh.50. In contrast, a two-kilo bag of maize flour will set you back Ksh.160, bread Ksh.60 and milk Ksh.80 in Lodwar. The same evidence is mirrored in price comparisons in Bungoma and Saboti in Trans Nzoia County. The price differences are further captured in maximum pump prices by the Energy and Petroleum Regulatory Authority (EPRA) whose discrepancy stems from higher logistics costs, the further one goes from the port of Mombasa. A litre of petrol costs Ksh.123.93 and Ksh.124.12 in Saboti and Bungoma in contrast to Ksh.122.81 in Nairobi. Further statistics from KNBS Integrated Household Budget Surveys (KIHBS) covering 2015-2016 reveal more data informing of a higher cost of living in rural areas. For instance, households in rural areas average at 4.5 in contrast to 3.3 in urban settings while arid and semi-arid lands (ASALs) feature an even higher count; Wajir 6.6, Garissa 5.5 and Mandera 6.4. In contrast, Nyeri has the lowest household count at 2.9, Nairobi and Mombasa have a mean of 3. Moreover, the severity of poverty is higher in rural areas with Turkana, Mandera and Samburu representing the poorest Counties. Listed from top to bottom, Kenya’s top expenditure items include mobile phone airtime, bus fares, rent, dining out, packaged milk, beer and bread. In February, the cost of living jumped to a near one year high with inflation at 5.78 per cent, the highest rate since April last year on the back of rising food and fuel costs.

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