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City’s wealthy benefit most from falling inflation

Nairobi’s rich families have had the biggest relief from the easing inflation over the past three months, helped by falling electricity and motoring expenses.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the city’s upper income segment recorded the biggest drop in inflation in the quarter through to October, compared to the lower and middle segment as well as the national average.

The KNBS data shows that average inflation for wealthy city homes stood at 4.33 per cent last month compared with 4.79 per cent for the lower income group and 3.38 per cent for the middle class.

Before August, Nairobi’s upper income households were the most exposed to inflationary pressures, signalling a shift that has seen the city’s poor the hardest-hit.

At 4.33 per cent, Nairobi’s wealthy have seen their inflation drop by 5.36 percentage points since August, compared with 3.01 percentage points and 2.7 for the middle and lower income segments respectively.

The national average has dropped by 2.93 percentage points since August.

CONSUMPTION PATTERNS

KNBS attributed the differences in the inflation levels among income segments to different consumption patterns, adding that the rich spend most of their income on utilities and transport while the poor use nearly half of their income on food.

Nairobi’s middle class spends on average of 22 per cent of their income on food, the wealthy use seven per cent while poor households spend 42.5 per cent.

But the city’s wealthy on average spend the largest portion of their income on transport at 27.9 per cent, explaining their exposure to rising motoring expenses.

While food prices have dropped over the past three months, electricity and fuel prices have dropped by a bigger margin over the quarter, offering relief to the top earners.