CBK sees inflation at 8pc if average oil prices stay at $110 per barrel
Speaking during a post-Monetary Policy Committee briefing, CBK Governor Kamau Thugge said such a rise would push inflation slightly above the Government's target range of between 2.5 and 7.5 percent.
Nairobi, Kenya - The Central Bank of Kenya (CBK) anticipates inflation to climb towards eight percent if global oil prices average $110 per barrel due to an ongoing Middle East conflict, Governor Kamau Thugge revealed during a recent post-Monetary Policy Committee (MPC) briefing. Should the conflict persist and oil prices reach $110, the country's headline inflation could surpass the Government's target range of 2.5 to 7.5 percent, according to Thugge.
"While it might not be by much, we foresee it could increase up to 8% if the conditions remain as described," he explained. Kenya's inflation rate increased to 6.5 percent in July from 6.4 percent in June, primarily due to surging food prices and electricity costs. However, Thugge noted that the CBK's default scenario assumes global oil prices to average around $90 per barrel if the Middle East conflict does not escalate.
"In our models, we have considered scenarios where prices soar to $110 and fall to $70, with the latter being a distinct possibility," Thugge added.
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