These are indirectly affected by fuel prices in addition to drought as they have to be transported to urban areas. "The transport index rose by 2.36 per cent mainly due to increase of petrol and bus/matatu fares. The prices of these went up by 4.42 and 9.20 per cent respectively between the months of February and March," the government statistician said in the report.

Electricity charges also went up as the power distributor KPLC factored in a higher fuel cost adjustment to reflect an increase in reliance on thermal power.

Last week the Monetary Police Committee of the Central Bank moved to stem inflation by raising its key lending rate from 5.75 per cent to 6.00 per cent alarmed that the effects could become permanent and damage economic growth. "We were trying to prevent any such effect," Governor Njuguna said Monday. "If see supply shocks are hitting domestic prices upwards, the best thing is to constrain money supply so that you do not ratify a higher plateau of domestic prices,"

James Mbugua

Nairobi Star/01/02/2011

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