A kilogramme of tomatoes costs Ksh 100 in May. A year later the same kilogramme costs Ksh 105. Your hundred shillings has not changed; what it buys has. That is inflation, and it is the figure that decides whether any rate on this site is worth having.

Kenya's 12-month inflation was 6.76% in September 2026. Hold that number while you read the rest.

The rate is measured, not estimated

The Kenya National Bureau of Statistics prices a fixed basket of goods and services every month — food, rent, transport, electricity, school fees — and builds the consumer price index from it. The 12-month rate is how much that basket moved against the same month a year earlier.

There is a second figure published beside it, the annual average, which compares the last twelve months with the twelve before them. It moves far more slowly and it is the one the Central Bank's target is written against. The two are not interchangeable: in September 2026 the 12-month rate was 6.76% and the annual average 5.44%, and a sentence that uses the friendlier one without saying which is quietly choosing its own evidence.

Why prices rise

Economists put the causes in two piles, and the distinction matters because the remedies are different.

Cost-push is the supply side. Something makes production more expensive and the cost travels down the chain: wages rise, fuel rises, a tax rises, a drought cuts the harvest, a road washes out and the crop cannot reach the market. If it costs Ksh 70 to grow a kilogramme of tomatoes and the farmer wants Ksh 30 of profit, the price is Ksh 100 — and when the growing costs Ksh 77 instead, the same margin makes it Ksh 107.

Demand-pull is the other side. People have more money to spend than the economy can produce goods for. Sellers with a queue at the door do not produce faster; they raise the price. This is the kind the Central Bank has most influence over, because it can change how much money is in circulation.

The arithmetic nobody does

Here is the whole point of this post, with current figures.

The 364-day Treasury bill went at 9.03% at the auction of 2 November 2026. Withholding tax on that interest is 15%, so what you actually keep is 7.67%. That is the best risk-free rate in the country and it reads like a good year.

Set it against inflation at 6.76% and what you have earned is 0.86%.

Not nine percent. Not seven and a half. Under one percent of real purchasing power, on an instrument backed by the government, for money you cannot touch for a year.

And notice it is 0.86%, not 0.91%. The instinct is to subtract — 7.67 minus 6.76 — but that is wrong, because the shillings you end the year with are themselves worth less. The honest sum divides:

(1 + 0.0767) ÷ (1 + 0.0676) − 1 = 0.86%

The gap is five basis points. It is small, it is in your favour if you subtract, and it is always in your favour — which is exactly why it is worth doing properly.

What it does to money that earns nothing

Inflation's real work is on the money that is not invested at all. At 6.76%, held flat:

  • KES 100,000 becomes KES 72,104 in purchasing power after five years.
  • After ten years it is KES 51,989.

Half. A current account paying nothing, or a savings account paying two percent, is not keeping your money safe. It is losing it slowly enough that no statement ever shows a negative number.

Some perspective on 6.76%

Over the 261 months Ipahco holds, from January 2005 to September 2026, Kenyan 12-month inflation has averaged 7.22%. Over the last ten years it has averaged 5.92%.

The extremes are worth knowing too. The highest reading in that record is 19.72% in November 2011; the lowest is 1.85% in April 2007. A country that has seen both inside fifteen years is not one where you can assume next year looks like this one.

The Central Bank works to a medium-term target of 5%, with two and a half percentage points of tolerance either side — so 2.5% to 7.5%. At 6.76% Kenya is inside that band, in its upper half.

What to actually do with this

Three things, and none of them is complicated.

  1. Quote every rate after tax and after inflation, or you are not comparing returns, you are comparing advertisements.
  2. Treat the inflation rate as the hurdle. Anything paying less than it is losing you money with a positive number in front of it.
  3. Watch the gap, not the rate. When inflation falls and your fund's rate falls with it, nothing has changed. When inflation falls and the rate holds, you have quietly got better off.