Growing instability in the Middle East is beginning to reshape inflation expectations in Kenya, with fresh survey data from the Central Bank of Kenya (CBK) pointing to rising concern over global supply disruptions and surging energy costs.
According to the CBK’s March 2026 Agriculture Sector Survey, a clear majority of respondents now anticipate inflation will rise over the next one to three months, signalling a notable shift in sentiment after months of relatively stable prices.
The changing outlook has been linked largely to the escalating tensions involving the United States, Israel, and Iran, which respondents believe are already disrupting global trade flows and pushing up international oil prices.
Participants identified higher fuel costs and supply chain disruptions stemming from the widening Middle East conflict as the biggest threats to price stability.
The latest findings represent a sharp turnaround from February’s survey results. At the time, only 28% of respondents expected inflation to rise in the short term, while 40% anticipated increases over a three-month horizon. By March, those figures had jumped to 59% and 62% respectively.
Within Kenya, transport expenses remain the biggest contributor to rising prices, cited by 91% of respondents, followed closely by the cost of agricultural and production inputs, which were highlighted by 71%.
Even so, confidence in the agricultural sector itself remains relatively strong. More than 80% of those surveyed expressed optimism about the sector’s prospects over the next year, driven largely by expectations of favourable long rains between March and May 2026.
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The CBK’s Balance of Opinion indicator, which tracks the gap between positive and negative expectations, showed particularly upbeat sentiment among farmers growing staple crops such as millet and rice. Around 75% of millet farmers and 67% of rice farmers indicated plans to expand cultivation acreage.
The survey results could complicate decision-making for the Monetary Policy Committee as it weighs future interest rate moves. While stronger harvests and exchange rate stability may help cushion the economy, external geopolitical shocks appear to be increasingly shaping inflation expectations among businesses and consumers.
The report noted that most respondents still believe Kenya’s broader economic growth momentum will hold. However, those expressing concern pointed to weakening consumer purchasing power and rapidly rising global oil prices linked to the Middle East conflict as major risks hanging over the economy.
