M-Pesa, pay TV included in new rating of inflation

Kenya has reviewed the goods used to measure inflation, dropping archaic goods like radio and video cassettes and including contemporary items like pay TV subscription, mobile money transfer fees and garbage collection charges.

The Kenya National Bureau of Statistics (KNBS) says the new basket will be used from Tuesday when it releases the March inflation figures. The bureau is also starting the publication of a quarterly jobs report, which will be used to indicate the rate of job creation in the economy, job losses, and underemployment, among others.

Job reports are one of the most important indicators of the health of an economy. KNBS will release the four quarterly reports from 2019 together.

“Mobile phone airtime has the highest expenditure in the new CPI with an overall weight of 5.496 percent having changed from 3.086 percent,” KNBS director-general Zachary Mwangi said in a statement on Monday.

It is highest when excluding food component that will have a weighting of 32.9 percent.

The number of items in the inflation basket has been increased from 234 to 330, while the data collection zones across the country have been doubled from 25 to 50. Kenyans’ expenditure patterns are a reflection of the increase in urbanisation and expansion of the middle class. The newly introduced items that now make up the 10 most important ones in the household budget.

City bus matatu fare is the second most important after mobile airtime, followed by rent cost for a single room. Hotel and restaurant food is the fourth most important item, climbing from ninth position in the previous CPI, with beef, beer, bread and fresh milk also featuring prominently.

Kerosene, associated with low-income households, has been removed from the top 10 expenditures list which indicates that even rural Kenyans are now accessing alternative sources of energy.

In an economy, inflation figures are important in estimating the cost of living to adjust to earnings and pension of residents in a country.