Kenya’s inflation hits 2-year high as Middle East war fuels price pressures

Kenya’s inflation rose to a two-year high in April and is set to climb further, as fuel supply disruptions linked to tensions in the Middle East push up costs in East Africa’s largest economy.

Consumer prices increased 5.6 percent year-on-year—the highest since May 2024—up from 4.4 percent in March, John Mbadi, secretary at Treasury Cabinet said in Nairobi on Wednesday, citing data from the Kenya National Bureau of Statistics. The figure sits above the midpoint of the central bank’s target range, signalling rising inflationary pressure.

Mbadi warned that inflation could accelerate further in May despite government measures to cushion consumers, including a reduction in fuel taxes.

Rising inflation in the East Africa’s biggest economy underscores how global geopolitical shocks are feeding into African economies through energy prices.

Fuel costs drive price surge

The spike in inflation reflects rising landing costs for petroleum products, which have increased transport and production expenses across the economy.

“Fuel inflation has already started feeding into the economy and reducing household purchasing power,” Mbadi said.

To contain the impact, the government cut Value Added Tax on petroleum products from 16 percent to eight percent and tapped the fuel stabilisation fund, spending 6.2 billion Kenyan shillings (about $40 million) in earlier this month to limit pump price increases.

Officials said the intervention helped prevent a sharper rise in inflation, though they acknowledged that further subsidies or tax cuts would strain public finances amid tight revenues and elevated debt servicing costs.

Growth slows as drought weighs on economy

The inflationary pressures come as Kenya’s economic growth softens. Gross domestic product expanded by 4.6 percent in 2025, down from 4.7 percent a year earlier, marking the slowest pace since 2020 at the height of the Covid-19 pandemic.

While growth remained broad-based—supported by agriculture, construction, and mining—the impact of drought on the agricultural sector weighed on overall output.

The statistics agency forecasts growth of 4.9 percent in 2026, though it warned that Sub-Saharan Africa remains vulnerable to external shocks, including geopolitical tensions affecting global energy markets.