Why everything you buy is about to get more expensive, as local firms pass record costs down to target your wallet.

Kenya’s private sector showed signs of stabilising in June, even as firms raised selling prices at the fastest pace in the history of the Stanbic Bank Kenya PMI survey.

The headline Purchasing Managers’ Index rose to 50.0 in June from 46.6 in May, showing that Kenya’s private sector stopped worsening after three months of decline. Readings above 50 show improvement, while those below 50 point to deterioration.
The improvement was mainly supported by a return to growth in new orders for the first time since February. Firms linked the rise in sales to customer referrals, marketing campaigns and business expansion efforts.

However, business activity remained weak. Output fell for the fourth month in a row as companies continued to face soft customer demand, higher costs, supplier constraints and limited cash flow. Although the decline was slower than in May, it still showed that firms were struggling to convert stronger orders into actual production.

Costs remained the biggest strain. About 41 percent of surveyed firms reported higher expenses in June, pushing input cost inflation to its highest level since November 2023. Most of the pressure came from higher fuel prices, although businesses also cited rising costs for foodstuff, paper, IT equipment and construction materials.

Businesses responded by raising their own prices, resulting in the fastest increase in output charges in the survey’s history. At the same time, supply chains came under renewed pressure. Supplier delivery times worsened at the sharpest pace since April 2020, as product shortages and high transport costs made some vendors delay deliveries.

Even with these pressures, firms were more hopeful about the months ahead. Employment rose after a slight decline in May, while inventories increased as some businesses prepared for stronger demand. Expectations for future activity also climbed to their highest level since February 2023, supported by planned business expansion, marketing efforts, innovation and hopes of lower fuel costs.
Stanbic Bank economist Christopher Legilisho said firms remain under pressure from higher fuel and raw material costs, although falling global oil prices could offer some relief over time.