The Cost of Living in Kenya - Inflation Rates and CPI

The Consumer Price Index (CPI) shows how the prices of everyday goods and services are changing over time. 

In every country, it is measured against a basket of goods that people in that country are likely to buy.

In Kenya, that basket of goods may contain maize flour, wheat flour, sukuma wiki (kale), cooking oil (salad), cow milk, and beef.

Therefore, the Consumer Price Index is a good measure of inflation and the cost of living in a country.

Quick Facts

1. Kenya’s overall Consumer Price Index in July 2025 was 145.74
2. Kenya’s annual inflation rate in July 2025 was 4.1%.
3. The month-to-month inflation rate between June and July 2025 in Kenya was 0.1%.
4. Kenya’s core inflation rate was 3.0% in June 2025.
5. Kenya’s non-core inflation rate was 6.2% in June 2025.

What is the Consumer Price Index, and how is it measured?

The Consumer Price Index shows us the average change in price level of a basket of goods and services consumers have purchased over time^[1].

In Kenya, such a basket of goods often contains maize flour, cow milk, cooking oil (salad), Sukuma wiki, carrots, cabbages, rice, sugar, etc.

Note that different countries (and even regions in the same country) may consume different commodities. As a result, the basket of goods and services often differs from country to country.

CPI compares the prices of goods and services relative to a base year. In the chart below, the base year is 2010, and the CPI for all countries is set to 100.

In 2023, Kenya's CPI was 246.30, meaning that prices were 146.3% higher than in 2010^[2].

In each of the countries above, the cost of living has increased, with a basket of goods costing more in 2023 than it did in 2010.

In Tanzania, prices are 117.43% higher than in 2010, while in Uganda, they are 109.93% higher. 

CPI rebasing in Kenya

What people consume often changes with time, meaning it is essential to periodically review what is included in a typical basket of goods.

For instance, over time, some people may start using ride-hailing instead of Matatus. Purchasing mobile data has also become more common in Kenya today than it was two decades ago.

Therefore, periodically reviewing the weights we assign to various items within the basket helps improve the overall accuracy of our CPI calculations.

Kenya rebased its CPI weights in 2019, using data from the 2015 and 2016 Kenya Integrated Household Budget Survey (KIHBS)^[3].

In July 2025, Kenya's overall CPI was 145.74, meaning prices in that month were 45.74% higher than in 2019.

The table below shows Kenya’s overall Consumer Price Index from January 2025.

Kenya’s annual inflation rates

We use the Consumer Price Index (CPI) to measure inflation.

The inflation rate is the percentage change in the prices of commodities between two periods.

Since we know that CPI measures the average price level of goods and services between two periods, the inflation rate is, therefore, the percentage change of the CPI between two periods.

For example, Kenya's CPI in July 2025 was 145.74, while the CPI in June 2025 was 145.58. Therefore, Kenya's month-to-month inflation rate was 0.1%.

Kenya's annual inflation rate was 4.1% in July 2025, as shown in the chart below.

Note that rebasing the Consumer Price Index does not affect the inflation rate.

Core and non-core CPI and inflation rates in Kenya

The prices of certain commodities, like perishable vegetables and fuel, tend to be influenced by temporary shocks and weather changes. 

The CPI and inflation rates based on these items may not reflect long-term trends in inflation or CPI. 

To solve this problem, we can break down CPI and inflation rates into their core and non-core elements.

Core inflation eliminates fuel and perishable items while non-core inflation includes them. Therefore, core inflation tends to be more stable than non-core inflation.

The chart above shows that Kenya's core inflation was 3% in June 2025, while non-core inflation was 6.2%.

This suggests that food and energy products mainly drove the headline inflation rate.

Note that Kenya and other EAC countries exclude the following items from the core inflation: Fresh fruits, fresh vegetables, fresh milk, dried vegetables, tobacco leaves, imported fuels (petrol, diesel, paraffin, and cooking gas), solid fuels (charcoal ad firewood), and utilities (electricity, metered water, and unmetered water)^[4].

Limitations of the Consumer Price Index

The Consumer Price Index is a good measure of inflation and the cost of living. However, it has several limitations^[5]:

• New products are continuously introduced into the market while others are removed, which makes tracking prices difficult.
• The prices of commodities may change due to changes in quality and technology.
• There’s a growing variety of goods and services, which makes tracking prices difficult. 

These limitations may cause the Consumer Price Index to overstate the inflation rate and, subsequently, the cost of living^[6].

See Also

1. Kenya food crop statistics

References