The Kenya National Bureau of Statistics (KNBS) latest report shows the annual consumer price inflation was 4.4 percent in January 2026. This represents a slight drop from the 4.5 percent recorded in December 2025. The Consumer Price Index (CPI), which measures the weighted aggregate change in retail prices for a fixed basket of goods, increased from 148.02 in December 2025 to 148.96 in January 2026, a monthly rise of 0.6 percent.
Source: KNBS
Key Drivers of Inflation
Upward pressures were experienced in prices in the food and non-alcoholic beverages division seeing a rise of by 7.3 percent over the year. There were notable monthly increases seen in staples like cabbages 9.3%, fortified maize flour 6.7%, and kale/sukuma wiki 4.0%. Additionally, electricity costs surged by between 3.4 and 3.7 percent depending on individual consumption levels.
In contrast, the Transport division saw a monthly decrease of 0.7 percent. This was driven by a 1.9 percent drop in country bus and matatu fares and marginal declines in fuel prices, with petrol falling 1.1 percent and diesel dropping 0.6 percent. Other items that became cheaper included mangoes -3.2% and sugar -3.0%.
Many households, in January were dominated by back-to-school expenses with education services showing a significant monthly jump of 2.1 percent. Parents this January faced higher costs for pre-primary tuition (3.3%), private secondary tuition (3.1%), and interestingly in girls’ school uniforms an increase of 4.8%. These education costs, combined with the rising price of cooking staples like maize flour and cabbages, significantly squeezed the disposable income of families.
The Central Bank of Kenya (CBK) continues to use the policy interest rate as its primary tool for managing inflation and supporting economic activity. After a series of reductions through 2025, the central bank trimmed its benchmark lending rate to 9.0 percent by December 2025, marking the ninth consecutive rate cut as inflation remained comfortably within the target range of 2.5-7.5 percent.
Lowering the policy rate helps reduce borrowing costs for commercial banks and their customers, which can stimulate credit, investment, and spending without destabilizing price expectations.
The slight dip in the annual inflation rate from 4.5% to 4.4% was partly attributed to base effects, reflecting the high price levels seen during the same period in 2025. This trend is an example of disinflation, where the rate of price increases slows down even though overall prices remain higher than the previous year.
The core inflation (which excludes volatile items like fresh food) increased slightly to 2.2 percent in January 2026, the overall trend remains relatively stable compared to the fluctuations seen in previous years.
The cooling of transport and fuel costs provides a necessary buffer for the economy. However, for the average Kenyan household, the sustained high cost of food and the recurring burden of education expenses remain the most significant challenges. Economic stability in the coming months will likely depend on whether the decline in fuel prices can eventually offset the persistent upward pressure on the kitchen table.
