Ruto's re-election bid tested by cost of living promise

A cashier processes payment at Naivas Supermarket's Eastgate outlet in Nairobi's Donholm on October 17. [Kanyiri Wahito, Standard]

The cost of living is handing President William Ruto a major challenge in his bid to get a second term at the Presidency.

The price of basic items has been edging up for the better part of this year, pushed up by the cost of fuel, with local pump prices hitting historical highs in the course of the year and bad weather that has resulted in higher food prices.

This is even as Kenyans grapple with reduced earnings due to high tax levels and companies shedding jobs.

The situation will likely worsen in the coming months as sustained conflict in the Middle East keeps energy prices high, ongoing war between Russia and Ukraine continues to disrupt global supply chains, and the impending El Nino that threatens both food production and damage to infrastructure.

Kenya’s annual inflation accelerated to 7.3 per cent from 6.8 per cent in September, driven by a surge in fuel,  transport and staple food prices. The higher cost of living is expected to define the political landscape ahead of the 2027 general election, with President William Ruto’s opponents arguing the government could have put in place measures to cushion Kenyans. This is even as the government considers reducing Pay As You Earn (PAYE).

Vincent Kimosop, head of Policy, Research and Advocacy at the Kenya National Chamber of Commerce and Industry (KNCCI), said the cost of living could be among the factors that shape next year’s election.

“An issue like cost of living can significantly affect an electoral outcome. If the issue of cost of living is not addressed, it will significantly influence the next election,” he said, adding that there are other issues also affecting livelihoods, such as youth unemployment, that would also be critical in the months leading up to the election.

Kimosop, reflecting on Kenya’s elections, noted that there has always been a “defining thing” that shaped past elections. Such included a push for multipartism in 1992, a push for change including a new constitution in 2002 and arguments for and against the International Criminal Court (ICC) that brought together Uhuru and Ruto, who at the time faced charges at the ICC.

He noted that the high cost of living has battered many households, with many forced to look to cheaper alternatives to make ends meet amid stagnating and even falling incomes.

“When you look at the rise in the cost of goods and services but the incomes of the people have not gone up, it means that to afford basics such as rent, food and transport, households have to go to their savings or make adjustments such as move houses, carpool or use public transport.”

The high cost of living was among the factors that shaped elections in 2022, when the Jubilee Administration was under heavy attack for failure to put in place adequate mechanisms to cushion Kenyans. At the time, Ruto – who was President Uhuru’s deputy but also emerged as his boss’s fierce critic – appealed to Kenyans during the campaign trail, telling them that cutting the cost of living would be the top agenda of his government.

Kimosop further noted that there are tools that the government can use to cushion Kenyans from the high cost of living, including suspending taxes.

“There are policy instruments that the government can use... it has recently reduced VAT on fuel to eight per cent, which means it can also bring it down to zero. During Covid, there was a reduction of taxes,” he said.

The latest figures from the Kenya National Bureau of Statistics (KNBS) show that the cost of many essential items has gone up by significant margins. Over the past 12 months, the price of Kerosene has increased  41.6 per cent, potatoes have risen by 34.9 per cent, cabbages by 29.1 per cent and fares have increased by about 30 per cent.

A litre of petrol has jumped 22.8 per cent over the year to Sh227.85, while diesel has risen 32.5 per cent to Sh228.77. On the flip side, only a few items offered slight relief and even then, the decline has been modest. The prices of sugar dropped 1.2 per cent month-on-month to Sh163.84, oranges fell 1.1 per cent to Sh125.81 and electricity for 200kWh dipped marginally by 0.1 per cent to Sh5,529.66.

President Ruto is seen to be trying to give Kenyans some relief, such as the temporary reduction of VAT on fuel and subsidies as well as exempting low-income earners from Pay As You Earn (PAYE) tax.

Ruto, during his Mashujaa Day address on October 20, said interventions such as exempting workers earning Sh32,300 and below from PAYE would give households more disposable income. The President has also in the recent past argued that his macroeconomic policies are stabilising the economy.

"We have prepared proposals to exempt Kenyans earning Sh32,333 per month or less from PAYE income tax. For workers on modest incomes, every shilling saved means more money to meet their families’ needs, including food, transport, and other essentials,” said the President.

The high cost of living has given President Ruto’s opponents fodder, who note the government’s lack of foresight as well as its extravagance has been at the expense of Kenyans. They are pushing for both a reduction in overall government spending as well as tax reliefs, including further reduction in petroleum taxes as well as doing away with levies such as the affordable housing levy.

“We want to form a government that puts Kenyans first. The cost of living has become unbearable for Kenyans as those in government continue to spend wastefully and steal but also continue to tax us heavily. We will cut government spending by between Sh500 billion and Sh1.8 trillion. This way, we will do away with taxes on fuel, electricity and the housing levy that is being used to construct houses that we do not know who is getting them. Our role will be to reduce your burden,” said Edwin Sifuna, Nairobi Senator and Linda Mwananchi leader at a rally last weekend.

President Ruto’s challenges are compounded by the global food supply situation, where food commodities are projected to rise by as much as 23 per cent this year. This might mean that Kenya may not have the option of resorting to cheap imports to bridge gaps in local production and bring down the cost of food.

According to the  World Bank’s Commodity Markets Outlook, factors such as the conflict in the Middle East and the El Nino phenomenon have affected cereal shipments and threatened crops and food affordability.

“Commodity markets are simultaneously affected by several major shocks,” said Ayhan Kose, deputy chief economist and director of the World Bank’s Outlook Group, when it released the report on October 28.

“Higher energy costs and trade disruptions are driving up the price hike of various commodities, which could aggravate inflation and food insecurity, and slow economic growth. The priority should be to protect the poorest people and support low-income countries that are already burdened by heavy debt burdens.”

In the report, the World Bank projects that commodity prices will increase by 23 per cent in 2026, which will be the second-highest level since 2013. This is largely on account of a 32 per cent jump in energy prices.

According to the Food and Agriculture Organisation Food Price Index, the global cost of food has been generally going up and is approaching a four-year high.

“Global maize prices rose by 5.6 per cent month-on-month to their highest level in more than three years, supported by a tightening supply outlook following lower-than-anticipated yields in the United States of America and less export availability in Brazil,” said the FAO index released in October.

“Trade disruptions in the Black Sea region reduced maize export availability, while uncertainty over shipping through the Strait of Hormuz kept concerns about fuel, fertiliser and freight costs elevated, providing additional support to commodity prices, particularly for those used as biofuel feedstocks, such as maize.”

Kenya’s annual inflation rate accelerated to 7.3 per cent in October, up from 4.39 per cent in March and approaching the Central Bank of Kenya’s (CBK) upper target limit of 7.5 per cent. Focus now shifts to the Monetary Policy Committee (MPC) ahead of its December meeting. The MPC kept the Central Bank Rate unchanged at 8.75 per cent at its October 7 sitting, holding it at the same level for the fourth consecutive time, as it seeks to anchor price expectations amid rising food and transport costs.

CBK will, however, be hard pressed to retain the relatively low benchmark rate, with drivers of the higher inflation rate being external and supply-side shocks, leaving policymakers with limited room to manoeuvre.

While appearing before the National Assembly Departmental Committee on Finance and National Planning last Friday, CBK Governor Kamau Thugge said that while inflation is expected to remain within the target range in the near term, geopolitical shocks could worsen the situation.

"The outlook for international oil prices remains uncertain and is predicated on the length and severity of the conflict in the Middle East,” said Thugge.

He further cautioned that the main risks to the inflation outlook relate to "heightened geopolitical risks, particularly the conflict in the Middle East, which has resulted in volatility in global oil prices; continued Ukraine- Russia conflict; and potential supply chain disruptions with risks on food prices due to the envisaged El Nino effect".

The CBK boss also highlighted the external pressure on the economy, noting that the current account deficit is projected to widen to 3.2 per cent of GDP in 2026, up from 2.1 per cent in 2025, directly due to the higher oil import bill.

Despite these pressures, Thugge pointed to a stable shilling, which has held firm at around 129.7194 against the U.S. dollar, supported by adequate foreign exchange reserves that have risen to $14.766 billion, providing 5.9 months of import cover.

He also noted that private sector credit growth remained strong in September 2026, with notable increases in sectors like Trade (19.2 per cent), Building and Construction (12.9 per cent), and Finance and Insurance (28.6 per cent).