The cost of living in Kenya has been a major issue in 2025. From rising food prices to higher electricity bills, Kenyans are feeling the pinch in almost every aspect of life. But what is driving these increases and what can be done about it?

1. Inflation and Global Economic Pressure

One of the main drivers of the cost of living in Kenya is inflation. According to the Central Bank of Kenya (CBK), the annual inflation rate was 7.8% as of March 2025 mainly due to food and fuel prices.

Global conflicts and economic instability especially the Ukraine-Russia conflict and supply chain disruptions in Asia have contributed to higher import costs for essential goods.

2. Fuel Prices and Exchange Rate

The weakening of the Kenyan Shilling against the US Dollar is directly affecting fuel prices. As of April 2025 the dollar is trading at around KSh 165 making imports more expensive. Since Kenya is a net importer of fuel even small changes in global oil prices have a big local impact.

In March 2025 EPRA increased fuel prices by an average of KSh 3.50 per litre citing rising landing costs and forex rates.

3. Electricity and Utility Tariffs

Electricity bills have gone up following the implementation of new tariffs by Kenya Power. The company cites increased generation costs and infrastructure upgrade.

For households consuming 100 kWh or less the average bill has gone up from KSh 1,200 to KSh 1,500 monthly. Water services in Nairobi and Mombasa have also become more expensive following revised tariffs by water service providers.

4. Food Prices and Agriculture Challenges

Basic food items like maize flour, milk, vegetables and cooking oil have also gone up in price. The effects of erratic weather, prolonged droughts and high fertilizer costs have led to reduced crop yields.

In April 2025 a 2kg packet of unga is retailing between KSh 180 and KSh 200 depending on the brand and location.

5. What the Government Is Doing

  • Subsidizing key products like fertilizer and fuel in specific regions.* Expanding the Inua Jamii and Hustler Fund programs to support vulnerable citizens.

  • Passing the Finance Bill 2025 with proposed tax reforms to boost local production and increase revenue.

6. How Kenyans Are Adapting

Many Kenyans are adjusting their lives to the rising cost of living:

  • Buying in bulk to save on transport and discounts.

  • Using public transport over private cars due to high fuel costs.

  • Taking up side hustles or online jobs for extra income.

  • Using energy efficient appliances to reduce electricity bills.

7. Outlook for the Rest of 2025

Economists predict a possible calm down towards the end of 2025 if global markets cool down and local production picks up. But until then Kenyans will have to hold on and find ways to manage their personal finances.