NAIROBI, KENYA – Kenyan families are facing a severe cost of living crisis as 2025 draws to a close, with the prices of essential goods rising significantly over the past year. While the official headline inflation rate has remained stable, data from the Kenya National Bureau of Statistics (KNBS) shows that the real-world impact on household budgets is being driven by sharp increases in the cost of food, electricity, and transport.

According to the latest KNBS Consumer Price Index (CPI) report released on October 31, 2025, the annual inflation rate for October stood at 4.6%, unchanged from September. However, this figure, which remains within the Central Bank of Kenya's target range, masks the severe pressure on key sectors that disproportionately affect ordinary citizens. The year-on-year inflation for food and non-alcoholic beverages was recorded at a high 8.0%, while transport costs rose by 4.8%.

Dissecting the Kenyan Household Budget

A deeper analysis of the KNBS data reveals a mixed but ultimately challenging scenario for consumers. While the prices for some staples like sifted maize flour saw a slight month-on-month decrease of 2.3% in October, this offered little relief against the steep annual increases for other critical food items. Compared to October 2024, consumers are paying significantly more for basics, with tomato prices up 37.3%, sugar up 22.6%, and cabbages up 20.3%. Other fresh produce, including oranges, potatoes, and onions, also saw price hikes in the month leading up to November.

Energy costs have emerged as another major driver of financial strain. The cost of 200 kWh of electricity rose by 3.0% between September and October 2025 alone, placing a heavier burden on households and businesses. Meanwhile, transport costs have remained elevated. The Energy and Petroleum Regulatory Authority (EPRA) announced on October 14, 2025, that pump prices for Super Petrol, Diesel, and Kerosene would remain unchanged through November 14, with Nairobi prices holding at KSh 184.52 for petrol and KSh 171.47 for diesel. While this stability was welcomed, it came after a period of sustained high prices that have kept matatu and bus fares elevated, with inter-town fares increasing by 1.4% in October.

Economic Headwinds and Policy Responses

The persistent high cost of living is occurring against a backdrop of mixed economic signals. The World Bank, in mid-2025, revised Kenya's economic growth forecast for the year down to 4.5% from a previous 5%, citing challenges such as high public debt and constrained private sector credit. High interest payments on public debt continue to absorb about a third of tax revenue, limiting the government's fiscal space for pro-growth spending or subsidies.

The Central Bank of Kenya (CBK) has maintained that the macroeconomic environment is stable. In its weekly bulletin covering the period ending October 30, 2025, the CBK highlighted that the Kenyan shilling has remained steady against the US dollar, exchanging at KSh 129.24. This stability, supported by foreign exchange reserves equivalent to 5.3 months of import cover, is intended to shield the economy from external shocks. However, the benefits of a stable shilling have yet to translate into significant relief for consumers at the checkout counter.

Analysts point to a combination of factors driving the price pressures, including government tax policies, which include a 16% VAT on fuel, and lingering global supply chain disruptions. Faced with these rising costs, many Kenyan households are being forced to make difficult financial decisions, cutting back on non-essential spending and seeking alternative income sources to cope.

As the country heads into the final quarter of 2025, the disconnect between stable macroeconomic indicators and the lived reality of escalating household expenses remains a critical challenge for policymakers and a source of growing anxiety for the Kenyan public.