Kenyans struggle with low purchasing power amid high cost of living
Kenya's annual inflation rate rose to a five-month high of 3.5 per cent in February 2025, from 3.3 per cent in January driven by higher prices of food, electricity, water, and transport.
Kenyans are grappling with a sharp decline in their purchasing power as the high cost of living continues to bite, driven by inflation, increased taxation, and stagnant wages.
Households countrywide are struggling to afford necessities, with food prices, fuel costs, and utility bills reaching unprecedented levels.
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Soaring inflation and cost of essentials
"I can no longer save any money," said Kennedy Onyango, a dedicated breadwinner and father of a young family.
"My boda boda business is the sole source of income that supports everything in our household," he shared with The Eastleigh Voice on Wednesday.
According to data from the Kenya National Bureau of Statistics (KNBS), Kenya's annual inflation rate rose to a five-month high of 3.5 per cent in February 2025, from 3.3 per cent in January driven by higher prices of food, electricity, water, and transport.
The inflation rate has been increasing for four consecutive months since November 2024.
Notably, the average price per kilogram of Maize flour and sugar at Sh. 62.22 and Sh161.34, increasing by 1 per cent since December 2024.
inflation stood at 6.3 per cent in February 2024, with food and non-alcoholic beverages being the most affected categories.
The price of maize flour, a staple food in most households, has risen by over 20 per cent in the last year, with a 2kg packet now retailing at an average of Sh170.
Similarly, cooking oil, sugar, and vegetables have become unaffordable for many, forcing families to cut down on meals or shift to cheaper alternatives.
Fuel prices have also remained high despite global crude oil fluctuations, with the Energy and Petroleum Regulatory Authority (EPRA) maintaining pump prices above Sh.176.58, per litre for petrol.
This has had a ripple effect on transport costs, with public service vehicles increasing fares, further squeezing household budgets.
Increased taxation and stagnant wages
Government taxation policies have exacerbated the crisis, with the Finance Act 2023 introducing a 1.5 per cent housing levy and raising Value Added Tax (VAT) on petroleum products from 8 per cent to 16 per cent.
These measures have increased production costs, which businesses have passed on to consumers through higher prices.
At the same time, wages have remained largely stagnant, with many employees struggling to keep up with rising expenses.
A recent report by the Federation of Kenyan Employers (FKE) indicates that real wage growth has lagged behind inflation, reducing the ability of workers to maintain their standard of living.
This has forced many Kenyans to rely on debt, with mobile loans and salary advances becoming a lifeline for households.
Impact on businesses and consumer behaviour
The retail sector has been hit hard by the low purchasing power, with supermarkets and small traders reporting reduced sales.
Many consumers are now opting for cheaper brands, buying in smaller quantities, or prioritizing only essential goods.
This shift in spending habits has affected businesses, forcing some to downsize or close shop entirely.
"We have seen a decline in customer spending, especially on non-essential goods," said a supermarket manager in Nairobi.
"Shoppers are now more price-conscious, and impulse buying has significantly reduced."
Government response and public outcry
The government has defended its taxation policies, arguing that they are necessary to reduce the country's rising debt burden and fund development projects.
President William Ruto's administration has also pledged to address the high cost of living through initiatives such as increased local food production and subsidies for essential commodities.
However, these measures have done little to ease public frustration.
Kenyans have taken to social media to express their grievances, with hashtags like #LowerFoodPrices and #RutoMustAct trending frequently. While some have threatened to take it back to the streets with Fresh 'Maandamano' this March.
Civil society groups have also organized protests, calling on the government to provide immediate relief.
The road ahead
Economists warn that unless urgent action is taken, the purchasing power of Kenyans will continue to decline, pushing more households into poverty.
Experts have suggested policy interventions such as reducing taxes on essential goods, increasing minimum wages, and stabilizing fuel prices to cushion consumers.
As Kenyans navigate these tough economic times, the pressure is mounting on the government to provide tangible solutions that will restore affordability and economic stability.
Until then, millions of households will continue to struggle to make ends meet in an increasingly difficult financial environment.
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