CBK Reveals Three Major Forces Driving Food Prices in Kenya

Kenyan Households Hit Hard as Food Prices Jump 7.3% Amid 4.3% Inflation

The Central Bank of Kenya (CBK) has identified weather conditions, transport costs, and distance to market or product availability as key factors influencing food prices in Kenya.

The findings come from the CBK Agriculture Sector Survey for July 2026, which assessed food prices, price expectations, agricultural output, acreage, production conditions and access to credit among farmers, retailers and wholesalers across the country.

Weather conditions emerged as the most widely cited factor, with 94% of respondents identifying them as important determinants of current price dynamics.

Transport costs followed at 93%, while distance to market or product availability came third at 75%.

CBK Identifies Weather Conditions as Key Food Prices Driver

The CBK findings highlight the strong influence of weather on agricultural production and food prices, particularly because most sampled farmers continue to depend on rainfall.

In fact, the survey found that 78% of farmers sampled in July mainly relied on rain-fed agriculture, while 22% mainly used irrigation.

Consequently, the central bank said concerns about inadequate rainfall in some food-basket regions had affected expectations about agricultural output and contributed to subdued optimism about the sector’s performance.

“Respondents identified weather conditions (94 percent), transport costs (93 percent), and distance to market/product availability (75 percent) as important determinants of current price dynamics,” CBK stated.

Meanwhile, transport costs ranked almost as high as weather conditions, with 93% of respondents identifying them as an important factor affecting current price dynamics.

Similarly, 75% of respondents cited distance to markets and product availability. Therefore, the findings show that food-price movements depend on production conditions as well as the availability and movement of commodities.

Middle East Conflict Adds Food Price Pressure

Beyond domestic factors, the CBK survey found that global developments also affected retail prices in Kenya.

Notably, 72% of respondents reported that the US-Israel-Iran war had significantly affected retail prices through global oil prices.

The conflict also disrupted global supply chains, including the shipping of petroleum products and other internationally traded commodities.

“The impact of the US-Israel-Iran war was reported by 72 percent of the sampled respondents as having had a significant impact on retail prices through global oil prices, which had increased sharply after the war broke out,” CBK said.

Furthermore, the survey identified labour costs and input prices as important domestic factors. Labour costs featured among the concerns of 71% of respondents, while 62% identified input prices.

By contrast, US tariffs had a relatively limited reported effect. Only 6% of respondents identified them as a factor influencing retail prices in July.

Also Read: CBK Announces Interest Rate Decision Amid Rising Global Inflation

Food Prices Expectations Remain Mixed

At the same time, the CBK found that expectations for food prices over the following month varied across commodities.

For instance, respondents expected prices of some fresh vegetables and maize products to decline, while potatoes were among the commodities for which relatively strong price increases were expected.

For food items in the core Consumer Price Index basket, expectations of price increases generally moderated compared with May.

Specifically, the proportion of respondents expecting fortified maize flour prices to increase fell from 36% in May to 5% in July.

Likewise, expectations of an increase in white wheat flour prices declined from 42% to 8%, while expectations for salad cooking oil fell from 48% to 15%. Expectations for cooking fat prices also declined sharply from 45% to 1%.

However, the outlook for non-core food commodities remained mixed. Respondents expected increases for potatoes, traditional vegetables, peas, spinach and fresh unpacketed milk, while they expected declines for tomatoes, onions and leeks, carrots, maize grain and maize flour.

Inflation Expectations Rise in July

Meanwhile, food-price concerns coincided with increased expectations for higher headline inflation over both the one-month and three-month horizons.

The proportion of respondents expecting inflation to increase one month ahead rose from 47.9% in June to 56.9% in July 2026. Similarly, those expecting inflation to increase three months ahead rose from 48.5% to 57.5%.

Even so, the July figures remained below the levels recorded earlier in the year. In April 2026, 81.4% of respondents expected inflation to increase over both horizons.

The CBK attributed the July increase mainly to concerns about unfavourable weather conditions in some food-basket regions and uncertainty over energy and oil prices amid the US-Iran war and the broader Middle East conflict.

“The increase in inflation expectations in July 2026 largely reflected respondents’ concerns about unfavourable weather conditions in select food basket regions and the potential adverse impact on energy and oil prices due to the ongoing US-Iran war and the broader Middle East conflict,” CBK stated.

However, some respondents who expected inflation to decline or remain unchanged pointed to improved food supply following favourable rainfall in some regions during the March-May 2026 rainfall season, stable pump prices and observed price stability.

Agriculture Sector Optimism Falls

Elsewhere, the CBK survey showed that optimism about the agriculture sector weakened compared with May.

The proportion of respondents expecting agriculture-sector performance to improve over the next three months fell from 81.5% in May to 67.1% in July. Over the next one year, the proportion also fell from 83.2% to 67.2%.

The decline largely reflected concerns about inadequate rainfall in key agricultural and food-basket areas and its potential impact on crop production.

“The moderation in optimism largely reflected concerns about inadequate rainfall in key agricultural and food-basket areas and the potential adverse impact on crop production. Nevertheless, respondents who remained optimistic cited expectations of improved rainfall conditions in the fourth quarter of 2026, together with continued government support for the agricultural sector,” CBK stated.

Despite the weaker agriculture outlook, respondents became more optimistic about the overall economy.

59.2% expected better economic performance over the next three months, up from 50.9% in May, while 59.5% expected an improvement over the next one year, compared with 50.0% in May.

Also Read: CBK Governor Put on Spot Over New Banking Fees Proposal

Meanwhile, the survey showed that access to agricultural credit increased slightly in July.

The proportion of sampled farmers who reported borrowing to finance agricultural activities rose from 30% in May to 34% in July 2026.

Family and friends remained the most reported source of credit at 38%, followed by commercial banks at 21%, buyers of farm produce at 19% and digital lenders at 16%.

Farmers mainly used agricultural loans to purchase farm inputs, with 81% of those who borrowed reporting this purpose. Another 49% used agricultural loans to meet labour costs.

The CBK noted that farmers could change their choice of lenders depending on the cost and accessibility of credit.

“It is important to underscore that farmers’ preferences on where to access credit may change from period to period depending on several considerations, such as the effective cost of credit, ease of credit access, and farmer awareness and information about credit facilities, among other considerations,” CBK added.

The survey involved 389 respondents, comprising farmers, retailers and wholesalers drawn from selected markets and farms across the country. The CBK conducted the survey between July 13 and 17, 2026.

Finally, the central bank recommended continued measures to reduce farm input costs, improve roads, strengthen agricultural extension services, reduce fuel costs and support access to irrigation and farm mechanisation.

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