Despite official figures suggesting stable inflation, millions of Kenyans are bracing for tougher economic times following the government’s decision to impose a new standards levy on manufactured goods. While the Central Bank of Kenya reported an overall inflation rate of 3.8% in June 2025, well within its target range households across the country say the numbers do not reflect the daily financial pain they face.
The levy, pegged at 0.2% of the customs value of nearly all manufactured goods, is capped at Ksh 4 million monthly for the first five years and Ksh 6 million thereafter. Essential commodities such as flour, cooking oil, fertilizer, and medicine are among the hardest hit, sparking fears of a ripple effect across the economy.
“This new levy is a direct hit to the pockets of ordinary Kenyans,” warned Dr. Amina Hassan, an economic analyst at the Institute for Policy Research. “While the government aims to ensure product quality, the timing and magnitude of this levy, especially on essentials, are deeply concerning. We could see a significant increase in the Consumer Price Index (CPI) and a lasting rise in the cost of living.”
Already, Kenyans are feeling the squeeze. Between April and May 2025, sugar prices rose by 4.3%, maize flour by 3.9%, and kale by 3.5%, despite the official food inflation rate being only 2%. By July, sugar and maize flour had climbed further, contributing to a 4.1% annual inflation rate.
The burden is worsened by stagnant wages and rising statutory deductions. Many households, particularly those in informal employment, have seen their purchasing power erode since the COVID-19 pandemic. For instance, the average disposable income for formally employed middle-income earners fell from Ksh 41,000 to Ksh 36,800 in 2024.
Farmers are among those hit hardest. “The cost of fertilizer is already crippling us,” lamented John Mwangi, a small-scale farmer from Eldoret. “This new levy means we’ll either have to cut back on fertilizer, which will affect our harvests, or pass the cost to consumers, making food even more expensive. It’s a lose-lose situation.”
Fuel prices also remain elevated due to tax hikes, including the doubling of VAT and tripling of the EPRA levy between 2023 and 2025. Even if inflation appears moderate on paper, the absolute cost of essentials like transport and energy continues to strain households.
The government defends the levy as essential for maintaining quality standards and protecting consumers from substandard goods. But critics argue the move is poorly timed and risks worsening inequality. “This feels more like a revenue-generating exercise than a genuine effort to improve standards,” Dr. Hassan observed.
Economists caution that Kenya’s continued reliance on the CPI provides only a partial picture of inflation. The rising cost of essentials such as rent, school fees, food, and healthcare exposes a widening gap between official data and the realities households face.
For many Kenyans, the new levy is not just another tax – it is the tipping point in an already fragile economic environment.
