The following article has been written in collaboration with a 23-year-old living in Kenya to share his experiences and how he tries to navigate living in an inflated and unstable government.
Inflation Rates in Kenya
The inflation rate in Kenya is 8.3% and has been increasing since the beginning of this year.
When I was in high school, I recall my parents always saying, “Back in our day…” they’d tell me stories about how they paid pennies for things like a gallon of gas or milk. They also seemed to live by the belief that everything was cheaper back then and life was simpler.
Now that I’m out of college, 23 years of age, and staying on my own, I need to buy my food, gas, clothes, electronics, and other necessities; I realize that things are not as cheap as my parents said were, and some things are more expensive.
For example, let’s say milk. In high school, a liter of milk costs around 55 Kenyan Shillings, and today the national average is about 110 Kenyan shillings, double the price of when I was in high school.
I also have noticed this inflation with clothing items, things like pants and shirts used to cost around 200 Kenyan Shillings in high school, but now they can be over 500 Kenyan Shillings depending on where you shop.
The inflation rate has had me adjust some of my lifestyle norms to conform to the harsh economic times. For instance, now I buy food commodities at wholesale shops at a cheaper rate instead of the supermarkets, where the prices have skyrocketed exponentially, especially over the last couple of months.
In addition, I now also have to buy second-hand clothes, locally known as “mitumba” in the local dialect. Since affording new clothes from shops is difficult due to the rise in prices.
Transportation to various places has also been affected and my daily transportation costs are higher. The public transportation stakeholders have hiked the prices, saying it is due to the rise in fuel prices. In truth, no one can blame them since they are also in business and trying to make a living.
The war between Ukraine and Russia has hurt the current world economic situation and has also had a detrimental effect on Kenya, especially in essential food prices like wheat and cooking oil prices have skyrocketed, making life very difficult.
Also, here in Kenya, we are in the election period. For some reason that many other Kenyans and I are unaware of, prices of goods and commodities always seem to rise above the usual period during the election, which occurs every five years.
The State of My Friends and Family
My friends and family are not immune to the harsh economic situation; they are also victims of the rises in prices of goods and services they buy; hence this causes a decrease in their purchasing power.
Reduced Purchasing Power.
Purchasing power is the capacity to purchase labor and products, and this can be measured in terms of what you can buy with $1, or it can be counted as a percentage increase or decrease over time. For example, the current exchange rate for the US dollar to Kenyan Shilling is $1 = 118 Kenyan Shillings.
The current inflation in Kenya has decreased purchasing power because it reduces the number of goods and services you can afford with your money.
When the price of something goes up, but your paycheck doesn’t go up at all, then this means that your salary will become worth less over time because there’s not enough money in your pocket to pay for everything you need to pay for now and later on down the road (like retirement).
Reduced Profit Margin.
Reduction in the profit margin is one of the adverse impacts of inflation on a country, and my friends and family are also facing this. This reduction in profit margin is due to an increase in the cost of production, which may result from an increase in the price of inputs such as labor and raw materials.
An increase in the cost of production is a result of an increase in input costs or decrease in productivity, or both. This increment can be ascribed to more significant costs for labor and raw materials (as they are primary inputs), resulting from an accelerated rate of inflation that has occurred over time. Thus some of my friends and family’s businesses are not doing well.
Despite everything, my friends and family can still cope with the current situation. Inflation impacts everyone, even if you don’t realize it. Inflation has affected my life and my family and friends in many ways, including your financial stability, purchasing power, and overall happiness.
Ways of Combating Inflation
All I can do now to help combat inflation in Kenya is to perform my duties as a patriotic citizen by paying my taxes, enabling the government to get revenue, and providing the ordinary people with essential services and commodities during these difficult times.
Since it is during the election period in the country, and without a doubt, we as Kenyans will elect a new government. Hopefully, the government that comes into power puts the matter of regulating inflation as one of its top priorities.
People have it tough with the harsh economic times, and it would mean a lot if the incoming government could deal with this issue and formulate a long-lasting solution.
I would also like to urge the Kenyan government to update some policies they use to combat the current economic crisis in the country to be able to deal with inflation. One of these policies is:
Monetary policy.
This involves the manipulation of interest rates and money supply levels to stabilize inflation rates and promote economic growth. The Kenyan Central Bank introduced a new monetary policy framework in 2012. It controls inflation by keeping short-term interest rates at 8% while reducing long-term interest rates through a program called “tied lending” (where commercial banks have to lend specific amounts of money at low-interest rates).
So far, this strategy has successfully reduced inflation from an average annual rate of 10% between 2007 and 2011 to 6% between 2012 and 2017. However, it has also led to slower economic growth and higher unemployment rates among Kenyans with limited access to credit due to their lack of collateral assets like land or buildings needed for collateralized loans from commercial banks.
Conclusion
I have nothing left but to trust that things will turn out okay shortly, especially now that we are very nearly choosing new leaders for the government. I remain optimistic that they will be able to change the current situation for myself and many other Kenyans.
Inflation is not suitable for the economy, affecting people in many ways and making their lives difficult. It is a hidden tax that hurts everyone long-term by making things more expensive and reducing purchasing power.
Inflation is a big problem in Kenya and around the world, but it can be solved with better economic policies and control over how much money is available to buy goods and services. The public authority needs to take care of this problem urgently.