The Consumer Price Index (CPI) is one of the most critical indicators in Kenya’s economic policymaking and public debate. It underpins the Central Bank’s inflation targeting framework, is critical to government revenue projections and outturns, is central to wage negotiations and shapes how we understand the cost of living.
Given its central role, the reliability and credibility of Kenya’s CPI should be beyond reproach. Yet recent developments raise important questions. This blog outlines three emerging issues that point to the need for greater transparency and accountability in how the CPI is produced and communicated.
But before turning to those concerns, it is worth recognizing two aspects of the CPI that deserves a strong applause as they are notable strength and reflect on the technical capabilities of the Kenya National Bureau of Statistics .
First, its breadth. Kenya’s CPI covers 330 goods and services, drawn from a wide array of 13 consumption categories including food, housing, transport, education, and healthcare. This broad scope helps ensure that the index reflects the diversity of household spending.
Second, its speed. KNBS publishes CPI figures on the last working day of the same month, a timeline that compares favourably even with many advanced economies, where inflation data is released with a lag of two to three weeks. This speed gives Kenyans access to timely information that’s critical for public accountability and policy response.
Earlier this year the Kenya National Bureau of Statistics (KNBS) added a welcome feature to its monthly bulletin: a measure of core inflation. By stripping out the items with the most volatile prices, food and fuel, the series gives policymakers a clearer sense of underlying price pressures. Unfortunately, the rollout has already exposed cracks in the Bureau’s quality control process.
In only the second release of the new series, the February 2025 bulletin, KNBS reported core inflation at 2.0 percent. Yet the index values they themselves published imply a rate of 1.89 percent, which (using KNBS’s own convention of rounding to one decimal place) should have been shown as 1.9 percent, not 2.0. The next month’s bulletin (March 2025) quietly corrected the figure, but without a footnote or even a brief mention that a revision had been made.
It is not an isolated lapse. In the May 2024 CPI bulletin the composite index level was published as 139.85; in the June 2024 release the same figure appeared as 139.64, again with no explanation. A difference of twohundredths may look trivial, but it shifts both month-on-month and year-on-year inflation calculations.
In the presentation of statistics, transparency is critical. Silent corrections, however well-intentioned, could erode trust. International best practice demands that any revision, no matter how small, be flagged, dated, and explained. If KNBS wants analysts, investors, and ordinary Kenyans to treat its CPI as the anchor of economic debate, transparent revision notes are not optional, they are essential.
More troubling than point one above, are the sweeping, unacknowledged revisions KNBS has made to historical food inflation data. A close look at the Monthly Economic Indicators shows just how large the changes are:
Table One (below) summarises similar shifts for every month from May 2023 to March 2025.
Table 1: Food Inflation (May 2023 to March 2025)
| Month | Previous | Updated | Difference (percentage points) |
| May-23 | 10.21 | 11.62 | 1.41 |
| Jun-23 | 10.28 | 13.23 | 2.95 |
| Jul-23 | 8.58 | 9.28 | 0.70 |
| Aug-23 | 7.48 | 8.46 | 0.98 |
| Sep-23 | 7.89 | 11.27 | 3.38 |
| Oct-23 | 7.80 | 11.46 | 3.66 |
| Nov-23 | 7.63 | 10.39 | 2.76 |
| Dec-23 | 7.66 | 10.22 | 2.56 |
| Jan-24 | 7.87 | 10.31 | 2.44 |
| Feb-24 | 6.88 | 6.64 | -0.24 |
| Mar-24 | 5.77 | 5.82 | 0.05 |
| Apr-24 | 5.60 | 7.33 | 1.73 |
| May-24 | 6.20 | 11.84 | 5.64 |
| Jun-24 | 5.59 | 12.91 | 7.32 |
| Jul-24 | 5.59 | 14.70 | 9.11 |
| Aug-24 | 5.34 | 13.72 | 8.38 |
| Sep-24 | 5.06 | 12.40 | 7.34 |
| Oct-24 | 4.27 | 10.75 | 6.48 |
| Nov-24 | 4.45 | 9.89 | 5.44 |
| Dec-24 | 4.82 | 9.97 | 5.15 |
| Jan-25 | 13.64 | 13.64 | 0.00 |
| Feb-25 | – | 14.29 | – |
| Mar-25 | – | 13.11 | – |
| Source: Monthly Economic Indicators Releases (January to March 2025) | |||
Over exactly the same period, the only month the headline CPI was adjusted was for May 2024, when it was adjusted by 0.24 percentage points as mentioned earlier. It is difficult to reconcile that food inflation was revised sharply upwards in all the months yet the headline inflation hardly budged.
Food carries a weight of about 32 percent in the consumer basket and accounts for roughly half of overall inflation dynamics as shown in the Chart One below. A nine percentage point surge in food inflation should logically leave a clear imprint on the headline rate, unless other components were simultaneously revised downward or there were major offsetting shifts elsewhere in the index.
Note: The data shown in Chart One reflect the updated (revised) figures from the official CPI releases.
Chart 1: Food and Non-Alcoholic Beverages Contribution to Inflation (January to June 2025)
Source: KNBS CPI and Inflation Releases 2025
There is no issue with legitimate revisions; better data should always replace imperfect data. But credibility demands that revisions should be:
None of that has happened. Instead, old figures are now no longer there, new ones have appeared, and consumers of this data have been left to guess why this could be the case.
Also, given that food price data are collected at fixed outlets during well defined reference periods, a 21-month old series should not swing so wildly without a major methodological overhaul. If such an overhaul occurred, the Monetary Policy Committee (MPC) which targets inflation using KNBS data should have been formally notified, and the Central Bank Governor’s presser would need to reflect it. The MPC team has a responsibility to explain.
The fact that the discrepancy persists across two consecutive bulletins amplifies doubts about data quality, interagency coordination, and transparency. These numbers are very important as they are at the centre of monetary policy credibility and market expectations. In short, transparency is not optional. Without it, both investors and citizens will wonder whether the numbers anchoring Kenya’s economic debate can be trusted, as we are already wondering at the moment.
Perhaps the most fundamental concern is that Kenya’s CPI still relies on outdated consumption weights. The last official rebasing was in February 2020, when the base year shifted from February 2009 to February 2019 and KNBS adopted weights drawn from the 2015/16 Kenya Integrated Household Budget Survey (KIHBS). Those data are now nearly nine years old.
Although the 2015/16 KIHBS covered both urban and rural households, budgetary constraints meant that the CPI update applied only to urban areas. As a result, the current CPI not only relies on old consumption data, it also overlooks a significant share of the population, particularly rural households whose consumption patterns and price experiences may differ substantially from those in urban areas.
Since 2016, relative food prices have risen sharply, by over 30% on average. Often, depending on price elasticity of demand, consumers do not just absorb price hikes passively. They adjust their spending. When the price of a commonly consumed item like beef becomes too high, households may buy cheaper alternatives like eggs or beans instead. This is known as consumer substitution; people shift their consumption toward items that give them similar value at lower cost.
They may also switch from premium brands to more affordable ones, or move from supermarkets to informal markets. These changes happen gradually but meaningfully, especially when disposable incomes are squeezed by new taxes or statutory deductions. In effect, the composition of the typical household “basket” changes over time, even if the official CPI basket does not.
If the CPI weights fail to capture that substitution, the measured inflation rate can diverge from reality. Simply put: If measured inflation is 3.8%, but the weights are off, is 3.8% still believable? We suspect that true household inflation may be lower than the official series if families have already shifted away from the most inflation prone items.
Yet, there is a second, equally important implication: reported headline inflation has been sitting below the Central Bank’s 5 percent target band for much of the year and mis-weights could mean that the shortfall is even larger than declared. In other words, the same measurement flaw that may overstate today’s inflation also risks overstating how close Kenya is to meeting its price stability objective, masking an even wider deviation from target than policymakers and the public realize.
Conclusion
Delays in conducting the Household Budget Survey are a serious concern, as Kenya is now falling short of the recommended five-year interval for updating CPI weights. This survey underpins the entire structure of the Consumer Price Index, and without timely updates, the CPI risks drifting further from the lived realities of Kenyan households.
Corrections to errors in data are welcome, but they should be fully explained in the releases containing them. Failure to do so compromises confidence in the underlying processes.
The credibility of Kenya’s macroeconomic policymaking depends on the credibility of its statistics. Ensuring KNBS has the financial capacity to deliver regular, high-quality data is not a luxury, it is a policy imperative.
Kenya has benefited from its relations with the world. Multilateral, plurilateral or bilateral relationships with other countries has increased Kenyan firms and individuals market access, peace cooperations, import sources and aid. Kenya has trade relations with the United State of America and the Islamic Republic of Iran. One of the most consequential relationships between the […]
The National Infrastructure Fund Act (No. 4 of 2026) took effect on 25 March 2026 with a headline financing target: to raise about Ksh 5 trillion over ten years for highways, railways, ports, energy, information and communications technology, water and irrigation. The plan works like this. Privatization proceeds become the Fund’s starting capital. That capital […]
Introduction The matatu metaphor can be used to analytically frame Kenya’s budget as a system that is subject to binding constraints, evolving expectations, and continuous adjustment to shocks. Like the matatu sector, fiscal policy reflects a balancing act between efficiency and quick action seeking to respond to public service delivery while constrained by competing sector […]
Introduction Imagine paying the same fare to travel at 6 a.m. as you would at 6 p.m., even though the matatu is half-empty in the morning and packed in the evening. At 6 a.m., there may be more seats available than passengers willing to pay for them. By 6 p.m., the situation is reversed. Hundreds […]
Absurd hypotheticals are useful precisely because they stress-test a system until its constraints become visible. This note asks what would break first if SpaceX, now a public company following its record-breaking Nasdaq debut in June 2026, with a post-IPO market value of approximately US$ 2.5 trillion, sought a secondary cross-listing on the Nairobi Securities Exchange. […]
| Post date: Tue, Jul 8, 2025 |
| Category: Monetary Policy |
| By: Fiona Okadia, |
The Consumer Price Index (CPI) is one of the most critical indicators in Kenya’s economic policymaking and public debate. It underpins the Central Bank’s inflation targeting framework, is critical to government revenue projections and outturns, is central to wage negotiations and shapes how we understand the cost of living.
Given its central role, the reliability and credibility of Kenya’s CPI should be beyond reproach. Yet recent developments raise important questions. This blog outlines three emerging issues that point to the need for greater transparency and accountability in how the CPI is produced and communicated.
But before turning to those concerns, it is worth recognizing two aspects of the CPI that deserves a strong applause as they are notable strength and reflect on the technical capabilities of the Kenya National Bureau of Statistics .
First, its breadth. Kenya’s CPI covers 330 goods and services, drawn from a wide array of 13 consumption categories including food, housing, transport, education, and healthcare. This broad scope helps ensure that the index reflects the diversity of household spending.
Second, its speed. KNBS publishes CPI figures on the last working day of the same month, a timeline that compares favourably even with many advanced economies, where inflation data is released with a lag of two to three weeks. This speed gives Kenyans access to timely information that’s critical for public accountability and policy response.
Earlier this year the Kenya National Bureau of Statistics (KNBS) added a welcome feature to its monthly bulletin: a measure of core inflation. By stripping out the items with the most volatile prices, food and fuel, the series gives policymakers a clearer sense of underlying price pressures. Unfortunately, the rollout has already exposed cracks in the Bureau’s quality control process.
In only the second release of the new series, the February 2025 bulletin, KNBS reported core inflation at 2.0 percent. Yet the index values they themselves published imply a rate of 1.89 percent, which (using KNBS’s own convention of rounding to one decimal place) should have been shown as 1.9 percent, not 2.0. The next month’s bulletin (March 2025) quietly corrected the figure, but without a footnote or even a brief mention that a revision had been made.
It is not an isolated lapse. In the May 2024 CPI bulletin the composite index level was published as 139.85; in the June 2024 release the same figure appeared as 139.64, again with no explanation. A difference of twohundredths may look trivial, but it shifts both month-on-month and year-on-year inflation calculations.
In the presentation of statistics, transparency is critical. Silent corrections, however well-intentioned, could erode trust. International best practice demands that any revision, no matter how small, be flagged, dated, and explained. If KNBS wants analysts, investors, and ordinary Kenyans to treat its CPI as the anchor of economic debate, transparent revision notes are not optional, they are essential.
More troubling than point one above, are the sweeping, unacknowledged revisions KNBS has made to historical food inflation data. A close look at the Monthly Economic Indicators shows just how large the changes are:
Table One (below) summarises similar shifts for every month from May 2023 to March 2025.
Table 1: Food Inflation (May 2023 to March 2025)
| Month | Previous | Updated | Difference (percentage points) |
| May-23 | 10.21 | 11.62 | 1.41 |
| Jun-23 | 10.28 | 13.23 | 2.95 |
| Jul-23 | 8.58 | 9.28 | 0.70 |
| Aug-23 | 7.48 | 8.46 | 0.98 |
| Sep-23 | 7.89 | 11.27 | 3.38 |
| Oct-23 | 7.80 | 11.46 | 3.66 |
| Nov-23 | 7.63 | 10.39 | 2.76 |
| Dec-23 | 7.66 | 10.22 | 2.56 |
| Jan-24 | 7.87 | 10.31 | 2.44 |
| Feb-24 | 6.88 | 6.64 | -0.24 |
| Mar-24 | 5.77 | 5.82 | 0.05 |
| Apr-24 | 5.60 | 7.33 | 1.73 |
| May-24 | 6.20 | 11.84 | 5.64 |
| Jun-24 | 5.59 | 12.91 | 7.32 |
| Jul-24 | 5.59 | 14.70 | 9.11 |
| Aug-24 | 5.34 | 13.72 | 8.38 |
| Sep-24 | 5.06 | 12.40 | 7.34 |
| Oct-24 | 4.27 | 10.75 | 6.48 |
| Nov-24 | 4.45 | 9.89 | 5.44 |
| Dec-24 | 4.82 | 9.97 | 5.15 |
| Jan-25 | 13.64 | 13.64 | 0.00 |
| Feb-25 | – | 14.29 | – |
| Mar-25 | – | 13.11 | – |
| Source: Monthly Economic Indicators Releases (January to March 2025) | |||
Over exactly the same period, the only month the headline CPI was adjusted was for May 2024, when it was adjusted by 0.24 percentage points as mentioned earlier. It is difficult to reconcile that food inflation was revised sharply upwards in all the months yet the headline inflation hardly budged.
Food carries a weight of about 32 percent in the consumer basket and accounts for roughly half of overall inflation dynamics as shown in the Chart One below. A nine percentage point surge in food inflation should logically leave a clear imprint on the headline rate, unless other components were simultaneously revised downward or there were major offsetting shifts elsewhere in the index.
Note: The data shown in Chart One reflect the updated (revised) figures from the official CPI releases.
Chart 1: Food and Non-Alcoholic Beverages Contribution to Inflation (January to June 2025)
Source: KNBS CPI and Inflation Releases 2025
There is no issue with legitimate revisions; better data should always replace imperfect data. But credibility demands that revisions should be:
None of that has happened. Instead, old figures are now no longer there, new ones have appeared, and consumers of this data have been left to guess why this could be the case.
Also, given that food price data are collected at fixed outlets during well defined reference periods, a 21-month old series should not swing so wildly without a major methodological overhaul. If such an overhaul occurred, the Monetary Policy Committee (MPC) which targets inflation using KNBS data should have been formally notified, and the Central Bank Governor’s presser would need to reflect it. The MPC team has a responsibility to explain.
The fact that the discrepancy persists across two consecutive bulletins amplifies doubts about data quality, interagency coordination, and transparency. These numbers are very important as they are at the centre of monetary policy credibility and market expectations. In short, transparency is not optional. Without it, both investors and citizens will wonder whether the numbers anchoring Kenya’s economic debate can be trusted, as we are already wondering at the moment.
Perhaps the most fundamental concern is that Kenya’s CPI still relies on outdated consumption weights. The last official rebasing was in February 2020, when the base year shifted from February 2009 to February 2019 and KNBS adopted weights drawn from the 2015/16 Kenya Integrated Household Budget Survey (KIHBS). Those data are now nearly nine years old.
Although the 2015/16 KIHBS covered both urban and rural households, budgetary constraints meant that the CPI update applied only to urban areas. As a result, the current CPI not only relies on old consumption data, it also overlooks a significant share of the population, particularly rural households whose consumption patterns and price experiences may differ substantially from those in urban areas.
Since 2016, relative food prices have risen sharply, by over 30% on average. Often, depending on price elasticity of demand, consumers do not just absorb price hikes passively. They adjust their spending. When the price of a commonly consumed item like beef becomes too high, households may buy cheaper alternatives like eggs or beans instead. This is known as consumer substitution; people shift their consumption toward items that give them similar value at lower cost.
They may also switch from premium brands to more affordable ones, or move from supermarkets to informal markets. These changes happen gradually but meaningfully, especially when disposable incomes are squeezed by new taxes or statutory deductions. In effect, the composition of the typical household “basket” changes over time, even if the official CPI basket does not.
If the CPI weights fail to capture that substitution, the measured inflation rate can diverge from reality. Simply put: If measured inflation is 3.8%, but the weights are off, is 3.8% still believable? We suspect that true household inflation may be lower than the official series if families have already shifted away from the most inflation prone items.
Yet, there is a second, equally important implication: reported headline inflation has been sitting below the Central Bank’s 5 percent target band for much of the year and mis-weights could mean that the shortfall is even larger than declared. In other words, the same measurement flaw that may overstate today’s inflation also risks overstating how close Kenya is to meeting its price stability objective, masking an even wider deviation from target than policymakers and the public realize.
Conclusion
Delays in conducting the Household Budget Survey are a serious concern, as Kenya is now falling short of the recommended five-year interval for updating CPI weights. This survey underpins the entire structure of the Consumer Price Index, and without timely updates, the CPI risks drifting further from the lived realities of Kenyan households.
Corrections to errors in data are welcome, but they should be fully explained in the releases containing them. Failure to do so compromises confidence in the underlying processes.
The credibility of Kenya’s macroeconomic policymaking depends on the credibility of its statistics. Ensuring KNBS has the financial capacity to deliver regular, high-quality data is not a luxury, it is a policy imperative.
Kenya has benefited from its relations with the world. Multilateral, plurilateral or bilateral relationships with other countries has increased Kenyan firms and individuals market access, peace cooperations, import sources and aid. Kenya has trade relations with the United State of America and the Islamic Republic of Iran. One of the most consequential relationships between the […]
The National Infrastructure Fund Act (No. 4 of 2026) took effect on 25 March 2026 with a headline financing target: to raise about Ksh 5 trillion over ten years for highways, railways, ports, energy, information and communications technology, water and irrigation. The plan works like this. Privatization proceeds become the Fund’s starting capital. That capital […]
Introduction The matatu metaphor can be used to analytically frame Kenya’s budget as a system that is subject to binding constraints, evolving expectations, and continuous adjustment to shocks. Like the matatu sector, fiscal policy reflects a balancing act between efficiency and quick action seeking to respond to public service delivery while constrained by competing sector […]
Introduction Imagine paying the same fare to travel at 6 a.m. as you would at 6 p.m., even though the matatu is half-empty in the morning and packed in the evening. At 6 a.m., there may be more seats available than passengers willing to pay for them. By 6 p.m., the situation is reversed. Hundreds […]
Absurd hypotheticals are useful precisely because they stress-test a system until its constraints become visible. This note asks what would break first if SpaceX, now a public company following its record-breaking Nasdaq debut in June 2026, with a post-IPO market value of approximately US$ 2.5 trillion, sought a secondary cross-listing on the Nairobi Securities Exchange. […]