Mbadi defends State measures on the economy

The National Treasury has made another bid to demonstrate that the Kenya Kwanza administration has made life better for Kenyans.

Treasury Cabinet Secretary John Mbadi says the cost of living has dropped as the economy responds to measures put in place to ease inflation for the last one year.  He explained that inflation – a measure of increase in cost of goods – had dropped from 6.3 per cent in February last year to 3.5 per cent in February. 

This, he said, was due to the lower cost of many items including food. Mbadi’s attempt to show the cost of living had dropped came after a damning report that showed Kenyans are struggling with access basics, with hunger levels in the country reaching alarming levels.

He said the low inflation was due to government interventions that included stabilising of the shilling, lower fuel prices and the fertiliser subsidy programme that the government says has increased food production. Mbadi also said the lower inflation has been due to reduction in cost of lending among banks following interventions by the Central Bank as well as availability of credit for households and businesses through  the Hustler Fund.

The rate of inflation had been on the decline last year, dropping to a 14 year low of 2.7 per cent in October last year from a high of 9.2 per cent in early 2023. It has however been edging and stood at 3.5 per cent in February.

Mbadi in a statement noted the steady decline from February last year to last month. “The year-on-year inflation rate for February 2025 was 3.5 per cent, a significant drop from 6.3 per cent in February 2024,” said Mbadi. “This shows that the average retail prices of various commonly used household items increased at a slower rate in February 2025 compared to February 2024,” he added.

The CS noted that there has been a general decline in prices of common users goods and services including electricity, fuel, milk, sugar, maize flour and wheat flour. “The reduction in prices of the key commodities signals continuous improvement of the economy and creates optimism,” he said. Some economists, however, have poked holes into the government’s claims of having eased the cost of living.

Institute of Economic Affairs chief executive Kwame Owino recently argued that the reason behind the low inflation—which stood at 3.5 per cent in February—is depressed incomes.

“The drop, in my assessment, is not because prices have gone down; it is because demand is weak. People do not have income and wages have not been rising,” he said during the DTB Economic Sustainability Forum in Nairobi. He said food prices over the last five years have experienced volatile price shocks compared to non-food items growing faster in cost than incomes.

As such, even if prices have reduced, it is not to the level they were back then, Kwame said. “Kenyans are saying ‘yes, there is some relief but it is not substantial.”

Owino cited the country’ poverty levels which stood at 40 per cent in 2024, saying 21 million people do not have sufficient funds to feed themselves. “People are poorer today than they were in the year of Covid. If you take all those things together, Kenyans are saying ‘you are giving us very fine numbers but I can’t get enough food,” he added.

According to the Kenya Poverty Report published by Kenya National Bureau of Statistics last year, overall poverty headcount in the country was at 39.8 per cent. “This implies that over 20 million individuals were unable to meet the overall poverty threshold,” the report said.

Mbadi’s statement followed a report published Wednesday that showed Kenya was among the countries with alarming hunger levels.

The Global Hunger Index (GHI) ranked Kenya 100 out of 127 countries, with a GHI score of 25.0.

Observers note that Kenyans are unable to afford basics because of eroded earnings as well as lack of employment.