Fuel strains and a weak shilling push headline inflation to a 40-month high, with core inflation climbing to 4.3%, leaving the Central Bank with little room to cut.

NAIROBI — Kenya's annual consumer price inflation accelerated to 7.3 per cent in October 2026, the highest reading in 40 months, according to the Kenya Consumer Price Index and Inflation Report released by the Kenya National Bureau of Statistics (KNBS) on 30 October 2026.

The headline rate rose from 6.8 per cent in September, continuing an unbroken climb that began in April 2026 when inflation stood at 5.6 per cent. The last time the year-on-year rate was this high was July 2023, also 7.3 per cent. The overall Consumer Price Index (CPI) moved from 156.47 in September to 157.60 in October, a monthly rise of 0.7 per cent.

The figure places inflation within 0.2 percentage points of the Central Bank of Kenya's 7.5 per cent upper target ceiling, and it marks the first time the rate has exceeded 7.0 per cent since July 2023. Against the 4.6 per cent recorded in October 2025, the twelve-month increase is now 2.7 percentage points wider.

The pressure is concentrated where households feel it most. Food and Non-Alcoholic Beverages, Transport, and Housing, Water, Electricity, Gas and Other Fuels together carry 57.2 per cent of the consumer basket, and all three accelerated. For a consumer holding KSh 100,000 a year ago, the same basket now costs KSh 107,328 — a loss of roughly KSh 6,800 in purchasing power in twelve months.

Food Inflation Crosses Double Digits

The Food and Non-Alcoholic Beverages division, carrying the heaviest weighting in the basket at 32.9 per cent, climbed 10.2 per cent year-on-year after rising 0.9 per cent month-on-month. It now contributes 3.1 percentage points to the overall 7.3 per cent rate — the single largest contribution of any of the thirteen divisions KNBS tracks.

Fresh dairy and vegetables led the October increases. Freshly packeted cow milk recorded the sharpest rise among the basket staples surveyed, gaining 4.7 per cent in the month to KSh 64.13 per 500 millilitres and 14.4 per cent over the year. Cabbage rose 4.1 per cent to KSh 82.38 per kilogram, and fresh un-packeted milk gained 3.9 per cent to KSh 80.58 per litre.

Staples followed the pattern:

• Fresh Packeted Cow Milk (500ml): Rose 4.7 per cent in October to KSh 64.13 (+14.4 per cent year-on-year).
• Cabbages (1kg): Advanced 4.1 per cent to KSh 82.38 (+29.1 per cent year-on-year).
• Fresh Unpacketed Milk (1L): Increased 3.9 per cent to KSh 80.58 (+11.9 per cent year-on-year).
• Irish Potatoes (1kg): Climbed 2.5 per cent to KSh 125.06 (+34.9 per cent year-on-year).
• White Wheat Flour (2kg): Rose 2.1 per cent to KSh 184.88 (+9.1 per cent year-on-year).
• Beans (1kg): Gained 1.6 per cent to KSh 185.75 (+2.6 per cent year-on-year).

Two items bucked the trend. Sugar fell 1.2 per cent to KSh 163.84 per kilogram and oranges eased 1.1 per cent to KSh 125.81, giving households the only meaningful relief in the food basket. It was a thin relief: sugar remains 11.1 per cent cheaper than a year ago, but every other surveyed staple above is more expensive than it was in October 2025.

Transport Surges 17.1 Per Cent After Fuel Subsidy Ends

Transport was the fastest-moving division in the report, posting 17.1 per cent annual inflation and a 1.7 per cent monthly increase — more than double the 0.7 per cent headline rate. It contributes 1.7 percentage points to the overall figure.

The proximate cause is fuel. In the mid-October price review, the State dropped the fuel subsidy for the first time since August 2025, and pump prices adjusted accordingly. Petrol rose 6.0 per cent in the month, from KSh 214.95 to KSh 227.85 per litre, while diesel climbed 4.4 per cent from KSh 219.04 to KSh 228.77. Over twelve months, diesel is up 32.5 per cent and petrol 22.8 per cent, with international crude prices elevated by the unresolved conflict involving Iran.

Fares moved with the pumps, and in some cases faster than the national averages suggest:

• Boda Boda Fares (Siaya town to Awelo): Rose 40.0 per cent to KSh 70 per trip (+40.0 per cent year-on-year).
• City Bus/Matatu (Westlands to Kangemi): Climbed 25.0 per cent to KSh 50 (+25.0 per cent year-on-year).
• Country Bus/Matatu (Kabarnet to Nakuru): Advanced 8.3 per cent to KSh 650 (+30.0 per cent year-on-year).

Only local flights offered relief, with fares falling 2.6 per cent, while taxi fares edged up 1.5 per cent.

Kerosene Jumps 41.6 Per Cent as Electricity Holds

The Housing, Water, Electricity, Gas and Other Fuels division rose 3.7 per cent year-on-year and 0.8 per cent month-on-month, contributing 0.6 percentage points to the headline rate — a modest figure that conceals a sharp divergence beneath it.

Electricity prices eased marginally. The cost of 200 kWh dipped 0.1 per cent to KSh 5,529.66 and 50 kWh fell to KSh 1,257.18, leaving both roughly 4 per cent cheaper than a year ago. A 13-kilogram cylinder of cooking gas rose just 0.3 per cent to KSh 3,429.61.

Kerosene was the exception. Its price surged 14.7 per cent in a single month, from KSh 192.56 to KSh 220.88 per litre, and it is now 41.6 per cent more expensive than in October 2025 — the steepest annual increase of any item in the KNBS survey. For the households that still rely on it for lighting and cooking, that increase alone negates months of lower grid tariffs.

Core Inflation Rises to 4.3%

For policymakers at the Central Bank of Kenya, the signal that matters most in this release is the continued climb in core inflation. Core inflation — which strips out volatile items such as fresh produce and fuel to track underlying price stability — rose to 4.3 per cent year-on-year, from 4.0 per cent in September. It has now risen in every month since February 2026, when it stood at 2.1 per cent, more than doubling in eight months.

Non-core inflation climbed more sharply still, to 15.1 per cent from 14.0 per cent, driven by fuel and fresh produce.

The contribution figures invert the intuitive reading of those two rates. Core inflation, at the lower rate, contributed 4.5 percentage points to the 7.3 per cent headline, while non-core contributed 2.8. The reason is weight: core items make up a far larger share of the basket, so each percentage point of core inflation moves the headline more. Within food, core items contributed 1.3 points and non-core 1.8 points; within transport, core items contributed 1.2 points and non-core 0.6.

The practical implication is that fuel-driven inflation can be reversed — subsidies can be restored, or crude prices can fall. The broadening of price pressures into manufactured food, health services, education and ICT is harder to undo, and it sits directly in the path of any rate cut.

Key National Average Retail Price Changes

KNBS tracks a fixed panel of goods and services across 50 urban data collection zones in the second and third weeks of each month. The national averages that moved furthest between September and October 2026 are set out below:

• Kerosene/Paraffin (1L): Surged 14.7 per cent to KSh 220.88 (+41.6 per cent year-on-year).
• Boda Boda Fares (Siaya to Awelo): Rose 40.0 per cent to KSh 70 (+40.0 per cent year-on-year).
• Petrol (1L): Up 6.0 per cent to KSh 227.85 (+22.8 per cent year-on-year).
• Fresh Packeted Cow Milk (500ml): Up 4.7 per cent to KSh 64.13 (+14.4 per cent year-on-year).
• Diesel (1L): Up 4.4 per cent to KSh 228.77 (+32.5 per cent year-on-year).
• Cabbages (1kg): Up 4.1 per cent to KSh 82.38 (+29.1 per cent year-on-year).
• Electricity (200 kWh): Down 0.1 per cent to KSh 5,529.66 (-4.1 per cent year-on-year).

On an annual basis, kerosene (+41.6 per cent), Irish potatoes (+34.9 per cent), diesel (+32.5 per cent), cabbages (+29.1 per cent) and petrol (+22.8 per cent) define the year, against sugar (-11.1 per cent) and electricity (-4.1 per cent at 200 kWh) as the only falls among the items surveyed.

Policy Outlook

The October reading lands within 0.2 points of the upper bound of the 7.5 per cent target ceiling, and a fourth consecutive monthly acceleration leaves little ambiguity about direction. The Monetary Policy Committee held the Central Bank Rate at 8.75 per cent at its October 7 meeting, when core inflation stood at 4.0 per cent and the overall rate at 6.8 per cent. Both numbers are now higher.

Two forces are working against a softer reading in November. The fuel subsidy removal has fully entered the pump price, but second-round effects — transport feeding into food distribution and business costs — typically take one to two more months to surface. International crude oil, reported at $115.91 a barrel in late October, remains the larger unknown.

The counterweight is a stable shilling and the government's stated commitment to keep prices within range, which has so far been met. If core inflation continues at roughly 0.3 percentage points a month, it breaches 5.0 per cent before the year ends.

Curious how much your Kenyan Shilling has changed in value? See what 1 KES from 1963 could buy today using our inflation calculator available at yuthufu.com

Notes

Source: Kenya National Bureau of Statistics (KNBS). (2026, October). The Kenya Consumer Price Index and Inflation Report: October 2026. Nairobi, Kenya.