State working to further cut cost of living – Mbadi

The government is monitoring market prices to institute timely remedial measures and prevent unwarranted price increases in a bid to further cut the cost of living which has dropped by almost three per cent in past 12 months.

Last week, an in-depth Star article showed that members of public were complaining that they were yet to feel effects of eased inflation, with majority struggling to place a meal on the table.

Data from the National Treasury shows that retail prices increased at a slower rate of 3.5 per cent in February this year down from 6.3 per cent same period last year, attributed to easing prices of goods and services in the overall basket consisting of 330 items.

According to the exchequer, the highest decline in average retail prices was that of a litre of kerosene and the highest increase was in hire of tents.

“Generally, there was a decline in prices of common user goods and services in the electricity, diesel, petrol, milk, sugar, maize grain, maize flour and wheat flour. The price of one litre of edible oil increased by five per cent from Sh333.31 in February 2024 to Sh350.10 in February 2025,’’ National Treasury CS John Mbadi said in a statement.

“The reduction in prices of the key commodities signals continuous improvement of the economy and creates optimism.”

The government monitored prices of goods and services in four regions: Coast, Eastern, Central and North Eastern where it notes that there was a general decline in prices of most of the common commodities.

For instance, the data shows a decline in the price of 1kg of sugar ranged from 19.8 to 25.1 per cent.

The highest decline in absolute terms was in North Eastern, which recorded a decline of Sh51.84 from Sh206.7 a year ago.

“The price reductions underscore the positive impact of government interventions and market stabilization efforts, ultimately enhancing affordability of goods and services while easing the financial burden on households across the country,’’ Mbadi said.

It attributes the overall drop in the cost of living to various policy directives including the stability of the local currency against the US dollar.

On Thursday, the shilling closed the market at 129.22, down from 160.8 units same period in 2024. It added that given the outcome of inflation, CBK has gradually eased monetary policy by lowering the Central Bank Rate (CBR from 13 per cent in August 2024 to 11.25 per cent in December 2024 and down further to 10.75 per cent in February 2025.

This move is expected to lower production and import costs, with the benefits going to consumers in form of cheaper goods and services. In addition, CBK in the February 2025 MPC meeting reduced the Cash Reserve Ratio (CRR) by 100 basis points to 3.25 from 4.25 per cent to lower the cost of funds for banks.

This will further support lowering of lending rates and support growth of credit to the private sector.

“The reduction of interest rates charged by banks to the private sector is likely to expand credit to private sector, encouraging investment, creating jobs and improving the general liquidity in the economy.’’

In order to lower the cost of living, the exchequer says President William Ruto’s government production subsidies, particularly in fertiliser and seeds, has led to improved agricultural output and food supply, which in turn drove down food prices.