Findings:

This brief assessed the impact of the Russia-Ukraine crisis on commodity prices in local Kenyan markets and compared them to changes in global prices. The analysis found that there has been a general rise in the price of food and energy commodities in Kenya reflective of similar changes at the global level. There were however some exceptions such as wheat flour in urban areas that declined even as global prices rose. For some commodities like sugar, local prices rose more sharply than global prices with some differences observed in price change patterns between rural and urban areas.

It appears from the above analysis that there is some transmission of changes in global prices to local markets that makes Kenya vulnerable to international shocks. Local policies and strategies that aim to dampen the effects of such shocks to local consumers are therefore required. The price rises are a concern to policymakers because of the negative impacts on the welfare of poor households. Rice, sugar, cooking oil and wheat flour are basic food commodities.

One of the short-term solutions is to provide targeted social protection support to the most vulnerable households facing higher food and energy prices, like what Kenya implemented during the COVID-19 crisis. In the long term, measures that facilitate freer intra-regional trade should be adopted and implemented to allow food commodity trade between countries on the continent. In addition, boosting local food production and productivity in the long term is a good strategy for dealing with external shocks emanating from global food markets.

Long term investments in energy saving technologies and energy efficiency improvements are also required. The Government of Kenya should continue and intensify funding to agriculture, especially for programs that aim to increase production and productivity. This will strengthen the country’s readiness to offset future global shocks on domestic food prices. The government could also subsidize farm inputs by, for instance, providing improved seed varieties and fertilizers that are required by farmers, while also encouraging more farmers in climatically favorable areas to grow crops like wheat and sugarcane.