Kenya’s inflation rate edged lower to 4.5% year-on-year in November 2025, down from 4.6% in October, marking the 29th consecutive month that the country has maintained price stability within the Central Bank of Kenya’s target band of 2.5% to 7.5%. The modest decline provides a measure of relief to Kenyan households grappling with the cumulative impact of rising living costs, though significant pressures persist in key expenditure categories.
According to the Kenya National Bureau of Statistics (KNBS), the overall Consumer Price Index increased from 146.84 in October 2025 to 147.08 in November 2025, translating to a month-on-month inflation rate of 0.2%. This relatively muted monthly increase reflects the delicate balance between declining prices in certain commodity categories and persistent upward pressure in others, particularly within the transport and food sectors.
“The year-on-year inflation rate stood at 4.5% in November 2025, a slight decline from an inflation of 4.6% in October 2025,” the KNBS stated in its monthly inflation report released on Friday, November 29. The statistical agency emphasized that the price increase was primarily driven by rising costs in three major expenditure categories that collectively account for more than 57% of the total weight in the inflation basket.
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Food Inflation Moderates But Remains Elevated
Food and non-alcoholic beverages, which carry the highest weight in Kenya’s inflation basket at 32.9%, continued to exert significant pressure on household budgets despite showing signs of moderation. The category recorded a year-on-year inflation rate of 7.7% in November, down from 8.0% in October, representing a reduction of 30 basis points that KNBS attributes to slower increases in staple food prices.
On a month-on-month basis, food prices rose by 0.3%, driven by sharp increases in several essential vegetables and proteins. Onions recorded the steepest surge among fresh produce, jumping 4.9% between October and November, followed by oranges at 2.9% and kale (sukuma wiki) at 2.7%. Beef with bones also climbed 1.5%, adding further strain to household food budgets.
Daniel Kathali, an economist interviewed by Tuko.co.ke, explained that the surge in vegetable and food prices can be traced to multiple factors, including fuel prices and the ongoing short rains season. The delayed onset and below-average rainfall across Kenya and Uganda have raised concerns about agricultural output in the coming months, potentially setting the stage for renewed food price pressures.
However, several key staples provided relief to consumers. Fortified maize flour prices declined by 3.8%, while sifted maize flour fell 3.2%, offering respite for millions of Kenyans who depend on maize-based products as dietary staples. Tomato prices dropped by 2.1%, reversing some of the gains recorded in previous months, while sugar prices eased by 1.1%. These declines helped moderate the overall food inflation figure and prevented a more pronounced increase in the cost of living.
The national average retail prices of selected commodities published by KNBS reveal the nuanced price movements across the food basket. Sugar dropped from Ksh184.95 per kilogram in October to Ksh182.23 in November, while sukuma wiki climbed from Ksh91.56 to Ksh94.07. Onions moved from Ksh95.95 to Ksh107.86, representing a substantial monthly increase that directly impacts household purchasing power.
Transport Costs Surge Despite Stable Fuel Prices
One of November’s most notable inflation dynamics was the disconnect between stable fuel prices and rising transport costs. The transport category recorded a year-on-year inflation rate of 5.1%, with a 0.4% month-on-month increase driven primarily by country bus and matatu fares, which surged 9.1% during the review period.
This increase occurred despite the fact that fuel prices remained unchanged throughout November. The Energy and Petroleum Regulatory Authority (EPRA) maintained pump prices at Ksh184.52 per liter for super petrol, Ksh171.47 for diesel, and Ksh154.78 for kerosene in Nairobi for the period from November 15 to December 14. In Mombasa, super petrol retailed at Ksh181.21, with diesel and kerosene at Ksh168.19 and Ksh151.49 respectively.
EPRA Director General Daniel Kiptoo explained that the stability in fuel prices reflected marginal changes in international petroleum costs. “The average landed cost of imported super petrol decreased slightly by 0.18 percent, from $620.24 per cubic meter in September to $619.14 per cubic meter in October,” Kiptoo stated in the November fuel price review. “Diesel increased by 1.81 percent from $623.75 to $635.05 per cubic meter, while kerosene rose by 0.71 percent from $627.72 to $632.16 per cubic meter over the same period.”
The disconnect between stable fuel prices and rising transport fares suggests that other operational costs—including vehicle maintenance, insurance, and driver wages—may be driving the increases. Additionally, seasonal demand factors associated with the festive period approaching and increased economic activity in certain sectors may have contributed to operators adjusting fares upward.
Kenya imports all its petroleum products in refined form, and local pump prices are determined based on international market trends and the prevailing US dollar-Kenya shilling exchange rate. The Central Bank of Kenya had noted in its earlier bulletins that international oil prices remained steady but volatile due to uncertain global conditions, with prices moderating mainly due to increased production and reduced demand.
Housing and Utilities Provide Modest Relief
The housing, water, electricity, gas, and other fuels category offered some relief to consumers, recording a year-on-year inflation rate of 1.9% but declining by 0.1% on a month-on-month basis. This monthly decline was primarily attributable to lower electricity tariffs, which fell by 1.7% for 50 kWh consumption and 1.5% for 200 kWh consumption between October and November.
The reduction in electricity costs provided welcome relief for both households and businesses, particularly small and medium enterprises that depend on reliable and affordable power for operations. However, this decline was partially offset by increases in other household energy sources, with firewood prices rising 1.2% and water charges climbing 0.6% during the same period.
The housing category’s modest inflation rate of 1.9% year-on-year represents a significant moderation compared to historical levels and reflects improved stability in energy markets following years of volatility. The electricity tariff reductions came against the backdrop of improved power generation and distribution efficiency, as well as favorable weather conditions that supported hydroelectric power production.
Core Inflation Signals Weakening Demand
A concerning trend emerged in November’s inflation data: core inflation, which excludes volatile food and energy prices, fell to 2.3%, marking the fourth consecutive monthly decline. According to NCBA Research analysis, this sustained decline in core inflation “indicates possible weakness in economic activity so far,” suggesting that subdued demand-side pressures may be signaling slower economic growth momentum.
Core inflation provides a more stable measure of underlying inflationary trends by stripping out the impact of volatile commodity prices that can be driven by temporary supply shocks or seasonal factors. The consistent downward trajectory in core inflation suggests that Kenyan consumers may be reducing discretionary spending in response to accumulated cost-of-living pressures, elevated interest rates, and economic uncertainty.
The divergence between headline inflation (which includes food and energy) and core inflation (which excludes them) indicates that much of Kenya’s current inflation pressure stems from supply-side factors—particularly in agriculture and energy—rather than from excess demand in the broader economy. This distinction has important implications for monetary policy, as it suggests that interest rate adjustments may have limited effectiveness in addressing inflation pressures driven primarily by supply constraints.
Monetary Policy and Currency Developments
Kenya’s monetary authorities have been actively managing the policy environment to support economic growth while maintaining price stability. The Central Bank of Kenya reduced its benchmark Central Bank Rate (CBR) to 9.25% from 9.50% in October, representing the eighth consecutive rate cut since the tightening cycle peaked in early 2024. The cumulative 375 basis point reduction from the peak of 13% represents the longest easing streak in CBR history.
The Monetary Policy Committee, chaired by Governor Dr. Kamau Thugge, justified the decision by noting that inflation remained below the 5% midpoint of the target range, providing room to support economic activity through lower borrowing costs. The rate reduction aims to stimulate private sector credit uptake and expand money supply, supporting businesses and consumers facing challenging economic conditions.
Despite the accommodative monetary policy stance, the Kenya shilling experienced marginal depreciation during November, weakening by 3.7 basis points month-on-month against the US dollar to reach Ksh129.8 compared to Ksh129.2 in October. Year-to-date, the shilling’s depreciation stands at 39.7 basis points, reflecting ongoing pressures in the foreign exchange market driven by debt servicing obligations, import demands, and capital flow dynamics.
The relative stability of the exchange rate, however, has helped anchor inflation expectations and contributed to the steady fuel prices observed during the review period. Exchange rate stability remains a critical factor in Kenya’s inflation outlook, given the country’s dependence on imported petroleum products, industrial inputs, and consumer goods.
Average lending rates have declined to 15.1% from 17.2% in November 2024, according to CBK data, though credit growth to the private sector remains modest at 5.0%. The implementation of the Risk-Based Credit Pricing Model, expected by March 2026, is anticipated to enhance monetary policy transmission and improve loan-pricing transparency, potentially accelerating credit growth and economic activity.
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Structural Inflation Drivers and Economic Context
Kenya’s inflation dynamics in November 2025 must be understood within the broader context of structural economic challenges facing the country. According to Oxfam’s Kenya Status of Inequality Report released in November 2025, nearly half of Kenyans survive on less than Ksh130 per day despite a decade of strong economic growth. The report reveals that just 125 wealthy individuals control more wealth than 43 million citizens, underscoring the widening economic divide driven by weak redistribution policies.
Food insecurity has surged dramatically, with 17 million additional cases recorded between 2014 and 2024 as inflation and soaring food prices hit low-income households disproportionately hard. The report found that poor Nairobi families recorded inflation rates 27% higher than wealthier households, highlighting how aggregate inflation statistics can mask vastly different lived experiences across income groups.
This inequality in inflation exposure means that while headline inflation of 4.5% may appear moderate, vulnerable populations face significantly higher effective inflation rates due to their spending patterns, which are heavily weighted toward food and basic necessities. The 7.7% food inflation rate, therefore, represents a much more severe burden for low-income households than the overall inflation figure suggests.
Kenya’s GDP growth has shown resilience, with the economy expanding by 5.0% in Q2 2025, up from 4.6% a year earlier, driven by strong performance in agriculture, transport, finance, and trade sectors. The CBK projects growth of 5.2% in 2025 and 5.5% in 2026, supported by expected rebounds in manufacturing and construction. However, the current-account deficit widened to 2.1% of GDP in the year to August, from 1.6% a year earlier, driven by higher capital-goods imports.
The non-performing loan ratio in the banking sector declined to 17.1% from 17.6% in June, as defaults eased in trade, tourism, and real estate sectors. This improvement suggests some stabilization in credit quality, though the NPL ratio remains elevated by regional standards and continues to constrain banks’ willingness to expand lending aggressively.
Agricultural Outlook and Climate Concerns
The agricultural sector’s performance remains critical to Kenya’s inflation trajectory, given food’s dominant weight in the consumption basket. The delayed short rains and below-average rainfall across Kenya and Uganda have raised concerns about potential upward pressure on vegetable prices in coming months. Agricultural production, particularly of horticultural products and staple crops, is highly sensitive to rainfall patterns, and any significant shortfalls could trigger renewed food price pressures.
NCBA Research has warned that potential upward pressure on vegetable prices due to these weather patterns could partially reverse the moderation in food inflation observed in November. The situation is being closely monitored by both agricultural authorities and the central bank, as food price shocks have historically been a primary driver of headline inflation volatility in Kenya.
The agricultural sector’s vulnerability to climate variability underscores the importance of investments in irrigation infrastructure, drought-resistant crop varieties, and agricultural extension services. While Kenya has made progress in these areas, significant gaps remain, leaving millions of farmers dependent on rainfall patterns that are becoming increasingly unpredictable due to climate change.
Global Economic Factors and Commodity Prices
International commodity price movements continue to influence Kenya’s domestic inflation dynamics. Brent crude oil futures have moderated in recent months, with NCBA forecasting prices around $60 per barrel in the near term. This relatively benign global oil price environment should help stabilize domestic fuel costs, assuming exchange rate stability is maintained and global supply-demand dynamics don’t shift dramatically.
The global economic outlook remains uncertain, however, with ongoing geopolitical tensions, trade policy shifts, and varying economic growth trajectories across major economies. Kenya’s exposure to global commodity price volatility—particularly for petroleum, edible oils, and wheat—means that external price shocks can quickly transmit to domestic inflation, regardless of monetary policy settings.
The moderation in international oil prices has been driven by increased production levels and concerns about global demand growth, particularly in major consuming economies. The Organization of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) have been managing production levels to balance market conditions, though internal disagreements and varying national interests have sometimes complicated coordinated action.
Outlook and Policy Implications
Looking ahead, NCBA concludes that inflation is expected to “remain around the midpoint of the target by the close of the year,” suggesting continued price stability within the CBK’s preferred band. This outlook is predicated on several assumptions, including stable exchange rates, moderate global commodity prices, and normal weather patterns supporting agricultural production.
However, several risk factors could disrupt this benign outlook. On the upside (higher inflation), risks include potential rainfall deficits affecting agricultural output, renewed global oil price increases due to geopolitical tensions, further shilling depreciation driven by external debt obligations, and possible fiscal pressures leading to tax increases or subsidy removals.
On the downside (lower inflation), factors include the continued weakness in core inflation suggesting subdued economic activity, potential further declines in global commodity prices, and improved agricultural productivity from better farming practices and input availability.
The CBK’s accommodative monetary policy stance reflects confidence that inflation will remain contained within the target band while attempting to provide support for economic growth. The next Monetary Policy Committee meeting scheduled for December 9, 2025, will provide further guidance on the policy trajectory, with markets expecting either a hold or potentially another modest rate cut depending on inflation developments and economic growth indicators.
The government’s fiscal position will also influence inflation dynamics going forward. Kenya faces significant debt servicing obligations and pressure to maintain fiscal discipline while addressing development needs. Any fiscal slippage or unexpected expenditure pressures could complicate the inflation outlook by affecting exchange rate stability or requiring monetary policy tightening.
Social and Distributional Impacts
The November inflation data, while showing overall moderation, masks significant distributional impacts across different income groups and regions. The KNBS report shows that food and non-alcoholic beverages, transport, and housing together account for more than 57% of the CPI basket, but these shares vary considerably across income quintiles.
Low-income households typically allocate a much higher proportion of their budgets to food and transport, meaning they experience effective inflation rates substantially above the headline figure. This differential impact has important social and political implications, as perceptions of inflation are shaped more by the costs of frequently purchased items like food and transport than by overall statistical measures.
Regional price variations also create disparate inflation experiences across the country. While the KNBS publishes national average prices, actual retail prices can vary significantly between urban and rural areas, and across different regions depending on local supply conditions, transport costs, and market structures. These regional disparities mean that headline inflation figures may not accurately reflect the cost-of-living pressures faced by populations in specific areas.
Conclusion
Kenya’s November 2025 inflation rate of 4.5% represents a slight easing from the previous month and continues the trend of price stability within the Central Bank’s target range that has now extended for 29 consecutive months. This sustained period of moderate inflation provides important macroeconomic stability and supports planning and investment decisions by businesses and households.
However, beneath the headline figure lie significant ongoing challenges. Food inflation at 7.7%, while declining from October’s 8.0%, remains elevated and continues to strain household budgets, particularly for low-income families. The 9.1% surge in transport fares despite stable fuel prices highlights cost pressures in the transport sector that may be driven by non-fuel factors including vehicle maintenance costs, insurance, and seasonal demand dynamics.
The decline in core inflation to 2.3%—its fourth consecutive monthly decrease—raises concerns about underlying economic weakness and subdued demand. While this provides room for continued monetary policy accommodation, it also suggests that the economy may be operating below its potential, with implications for employment and income growth.
The Central Bank’s continued monetary easing, evidenced by the eighth consecutive rate cut to 9.25%, reflects an attempt to balance price stability with support for economic growth. The relative stability of the Kenya shilling, combined with moderating global commodity prices, provides a favorable backdrop for maintaining low inflation in the near term.
Looking ahead, key factors to watch include weather patterns and their impact on agricultural production, global oil price movements and their transmission to domestic fuel costs, exchange rate stability and its influence on import prices, the pace of credit growth to the private sector and its impact on economic activity, and fiscal policy developments and their potential inflation implications.
For Kenyan households, particularly those in lower-income brackets, the inflation outlook remains challenging despite the modest headline figure. The combination of elevated food inflation, rising transport costs, and slow wage growth continues to erode purchasing power and living standards for millions of citizens. Addressing these structural challenges will require not just monetary policy management but also broader economic reforms aimed at improving agricultural productivity, enhancing transport efficiency, and creating more inclusive economic growth that benefits all Kenyans.
As 2025 draws to a close, Kenya’s inflation performance has been relatively stable, providing a foundation for economic planning and policy implementation. However, translating this price stability into tangible improvements in living standards for the broader population remains the critical challenge for policymakers in the months and years ahead.
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By: Montel Kamau
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