What is Inflation in the Kenyan Context?

The term inflation refers to the process of continuous rise of prices in an economy and the falling of the purchasing power among buyers.

Let me explain using an analogy so that even a grade 3 child can understand, when you put pressure into a balloon, the balloon expands and gets bigger.

Similarly, when taxes are raised as in the example of Kenya, the prices of things increases thus becoming inflated like the balloon. When the prices increase or rather they get bigger, goods and services become more expensive.

It is for this reason that Inflation usually results to the rise of cost of living in a country.

One thing to note is that inflation does not occur overnight but rather over a period of time. Therefore, if you are not conversant with business terms, inflation is simply the measure of how much the price of goods or services such as milk and bread or haircut increase over a certain period of time.

In Kenya, the cost of things we buy regularly, like food and clothes, went up by 6.3% in February 2024; the inflation rate. That's slower than before and the lowest it's been since March 2022. Last month, it was even higher at 6.9%. Experts thought it would stay the same, but it dropped a bit. This is okay because it's still within the range that the central bank thinks is good for the economy, which is between 2.5% and 7.5%. So, while prices are still going up a bit, they're not rising too fast, which is good news for us.