Inflation, Cost of Living, Solutions
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I help individuals and businesses improve their financial management to reduce waste and grow consistently.
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Kenya's inflation rate as of June 2022 stood at around 7.9%, surpussing CBK's target of 2.5-7.5%.
This is the highest cost of living Kenya has experienced since 2017 (Kenya National Bureau of Statistics)
Causes:
-Global economic slowdown
-Slow post-COVID-19 supply chains
-Rising costs of production
-Global food insecurity issues linked to the war in Ukraine
Impact:
Kenyans are gruppling with high cost of food & household goods, and rising fuel costs which are linked to high transportation costs.
What to do about it (Solutions):
Individuals:
a) Invest in long -term assets like bonds or stocks with long maturity.
b) Cut down on expenses like recurring subscriptions, internet, and negotiate insurance rates. You should also take advantage of discounts, as well as explore ways to lower your interest on loans and credit cards.
c) Increase your income: Create passive income by selling your services during free time, start a business, or even rent out free space (parking, swimming pool) or house space on Airbnb. You can also sell unused items like furniture.
Policy Options:
a) We should encourage and promote productivity in economy-driving sectors. E.g. design and implement policies to support the 'Jua Kali' sector. This will help create more jobs in the informal sector, helping reduce youth unemployment.
b) Ease food shortages and heavy reliance on food imports by enhancing long-term, sustainable productivity in the Agriculture sector. For instance, the government can waiver or reduce import duties on inputs of production (raw materials) like fertilisers. We should also encourage domestic production of things like vegetable oils, as well as adopt irrigation.
c) Support to SMEs through reduced interest rates/cost of capital.
d) Strive to manage our debt (volume and cost of borrowing) and budget deficits.
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