Studying the Relation Between, Interest Rate and Inflation Rate Based On Fischer International Theory and its

effect in Kenyan Economy

Abstract The aim of this research is to study the relation between, interest rate and inflation rate based on Fischer international theory. The study is an attempt to find a relation between the change in the interest rates and inflation and its effect in the Kenyan economy. Participants in the Kenyan economy seen through the stock markets and consumer pricing indices believe that the interest rates have a bearing on the behavior of inflation. This popular perception is put to test in the following research by correlating the change in the interest rates and inflation in stock market and consumer pricing index. Empirical data has been collected from Kenya Bureau of statistics. Subjected to correlation analysis to find out the significance of these parameters. The monthly interest rates, consumer price index, number of transactions , number of shares traded, foreign exchange rates and reserves has been collected for the last one year. The correlation between the change in interest rates and inflation is calculated for each month contracts of these factors.

CHAPTER ONE INTRODUCTION

The issues regarding currency rate, interest rate and inflation rate are among main issues of policy making in developing counties. Currency rate is considered as such a key economic variable in policy making that some experts in developing countries name it a nominal anchor. Exchange rate is highly affected by financial factors particularly interest rate. Many researchers believe that interest rate affects currency rate. Currency determines commercial trend, inflation, capital flows and foreign investment inflation, savings, and international payments in an economy (Aziz 2008). When stock holders attack the currency of a country, of a country, controlling currency rate even under government protection- may be highly expensive and even useless. High interest rate prevents capital return and economic growth, and finally damages the economy. (Solnik 2000) several factors influence variation of currency rate including changes in foreign demand and supply, amount of payment problems, inflation growth, interest rate, national income, financial supervisions, and changes in predictions and stock market (Khalvati 2000). On the other hand, many attempts have been made to adjust interest rate during recent decades because of remarkable influence of this parameter in solving or making economic problems and disorders in some societies. Interest rate refers to a sum paid by borrower for using a capital temporarily it also indicates that borrower delays in using its liquidity in order to receive more benefit. Interest rate is like a double bladed sward: if interest rate increases, the owners of surplus financial resources will lend parts of them with the expectation of receiving more profit in future.

In other words, high interest rate persuades them to lend their surplus liquidity to others. However, it should be mentioned that in balances states, interest rate is balanced with supply (Investment) and demand (saving) in capital market (Duetsche Bundesbank 2001). Fischer international effect theory states that foreign exchanges with relatively high interest rate will move toward lower prices because high nominal interest rate reveals expected inflation rate (Madura 2000). This theory also shows that changes in spot exchanges rate between 2 countries will move toward same changes in nominal interest rate (Demirag and Goddard 1994). It is very important for economic policy makers to answer this question: whats the relation between currency rate and interest rate, and how does interest rate react occurred fluctuation in currency rate? Regarding changes in currency rate, interest rate and inflation, Fischer international effect theory states that prospective currency rate can be determined by changes in nominal interest rate. Changes in predicted inflation within nominal interest rate is expected to influence cash currency rate in future (Sundqvist 2002). Aust. J. Basic & Appl. Sci., 5(12): 1371-1378, 2011-1372. The objective of this research to study the relation between inflation rate and interest rate. Therefore, this research analyzes the effect of interest rate changes on currency rate changes according to Fischer international theory. Moreover, the effect of inflation rate on interest rate changes is studied base on Fischer Effect Theory. Here, theoretical concepts of currency rate, interest rate and inflation rate are first studied according to various economists. Then the performed studies regarding research subject are presented. Afterwards, the applied model for testing the parameters of this article is introduced. Finally, the findings from testing the hypotheses are analyzed.

CHAPTER TWO LITERATURE REVIEW 2.0 THEORETICAL BACKGROUND For many years money has been a central issue in monetary policy making. Central banks used to set monetary targets and academics used to teach monetary policy, as a story about how central bankers adjusts the money supply. Even the name of the main activity of central banks took its origins from the word money. However, the world is changing, and targeting monetary aggregates becomes less and less fashionable. The main reason is probably the growing instability of money demand functions, A. Blinder (1998). In reaction, monetary authorities move from targeting the money supply towards controlling nominal interest rates at the money market. As a result, in the recent decade, a huge amount of papers, describing monetary policy rules based on nominal interest rates, has been written. As it is, however, well known, assuming there is no money illusion, it is in fact the real and not the nominal interest rate, that can influence spending decisions of enterprises and households. Monetary authorities can alter real rates (at least in the short run) as long as prices and inflationary expectations are sticky2. Thus, it is crucial for a central banker not only to look at the level of nominal interest rates, but also to monitor the behaviour of real rates. J. Hallman, R.Porter, D.Small (1991). Despite the growing importance of interest rate oriented policies, our knowledge on this topic is still unsatisfactory. The first approach to describe the relationship between real interest rates and inflation is often ascribed to K.Wicksell (1898, 1907). However already 100 years earlier, two British economists, H.Thornton and T.Joplin, described economic processes

resulting from the central bank.s influence on the real rate of interest (T.M.Humphrey 1993). Nevertheless, not much has been done in this field since. Recent papers, among others by M.Woodford (1999, 2000), revived the (now called) Wicksellian idea of inflationary processes being determined by the gap between the real and natural3 rates of interest. In a very recent study K.Neiss and E.Nelson (2001) use a stochastic general equilibrium model to examine the properties of the interest rate gap as an inflation indicator. The above mentioned studies are strongly in favour of using the gap as a measure of the stance of monetary policy that could be used by central bankers in their day-to-day (or rather month-to-month) policy setting.

2.1 LITERATURE REVIEW

The basic puzzle about the so-called Fisher effect, in which movements in short-term interest rates primarily reflect fluctuations in expected inflation, is why a strong Fisher effect occurs only for certain periods but not for others. This paper resolves this puzzle by reexamining the relationship between inflation and interest rates with modern time-series techniques. Recognition that the level of inflation and interest rates may contain stochastic trends suggests that the apparent ability of short-term interest rates to forecast inflation in the postwar United States is spurious. Additional evidence does not support the presence of a short-run Fisher effect but does support the existence of a long-run Fisher effect in which inflation and interest rates trend together in the long run when they exhibit trends.

The evidence here can explain why the Fisher effect appears to be strong only for particular sample periods, but not for others. The conclusion that there is a long-run Fisher effect implies that when inflation and interest rates exhibit trends, these two series will trend together and thus there will be a strong correlation between inflation and interest rates. On the other hand, the nonexistence of a short-run Fisher effect implies that when either inflation and interest rates do not display trends, there is no long-run Fisher effect to produce a strong correlation between interest rates and inflation. The analysis in this paper resolves an important puzzle about when the Fisher effect appears in the data. Nber working paper No. 3632 ( Also Reprint No. r1786) Issued in May 1993 NBER Proram.

2.2 THEORETICAL CONCEPTS

2.2.1 FISCHER INTERNATIONAL THEORY Fischer International Theory explain the relation between interest rate changes between 2 countries and expected changes in currency rate. According to this theory, the real output of the investors in local stock market is the same as foreign interest rate and making change in the value of foreign currency (Madura 2000). The equation of real output or efficient output (adjusted currency rate) is: r= (1+if)(1+ef)-1 Where, r= real output of investors if= foreign interest rate ef= the percentage of changes in the value of foreign currency (Madura 2000).

Therefore, Fischer international Effect Theory suggests that foreign currency market E(r) should be equal with interest rate of investment in local money market (ih). Since in average, efficient output in a foreign investment should be equal with efficient output in a local investment, therefore: E(r)= ih To provide investment opportunities either locally or globally, and to obtain similar interest rate, r should be adopted by ih and foreign currency should change in order that ih=r. therefore, 1(1+ef)(1+if)=ih r= real output of foreign deposit, ih= interest rate internal deposit ih is presented as follows to show the value of foreign currency (ef). Finally the function of IFE theory . It can be concluded that when local interest rate is lower than foreign interest rate, the value of foreign currency will decrease because the exceeding of foreign interest rate from local one will cause collapse in the value of foreign currency. (Utami, Inanga 2009). Currency Rate: Since currency rate presented as floating and/or managed floating in global economy (1974 up to now), many attempts have been made to identify the parameters which can explain currency rate fluctuation, and specify their effect on currency rate. Due to many deep transformations in currency systems, this parameter plays, significant role in economic policies. Currency rate means the number of national monetary unit of a country which is needed to purchase one unit of national currency of another country. (Mohammad Masah 2009).

Fischer Effect Theory: Fischer believe that real interest rate is apart from monetary frames. Fischer equation is as follows: e rr rn

Where: rn= nominal interest rate, e = expected inflation rate, rr= real interest rate.

All high interest rate are constant and combined. However, Fischer applies the following equation for simple rates: Aust. J. Basic & Appl. Sci., 5(12): 1371-1378, 2011-1373 When rn increases, e also goes up.

Fischer says that nominal interest rate is complied with expected inflation. Researches believe that any increase in monetary growth rate leads to higher inflation rate, but nothing occurs to real parameters. Careful application of this principle leads to money influence on interest rate. This parameter (interest rate) is very important in understanding micro-economy because they represent economy and prospective economy as well as their effects on investment and savings (Kong Mary 2002). Relation between Interest Rate and Inflation Rate: Wicksell introduces the following model to describe the relation between interest rate and inflation, and believes that interest rate gap as 0 determines inflation effectively:

When there is no gap in interest rate, inflation rate becomes zero and prices are fixed. Brzoza said that in the time of expanding monetary policies (interest rate r*>r), inflation will occur, and in contracting monetary policy, prices will decrease (r*<r). Perpetual high inflation rates are related to permanent low real rates provide that natural rates are completely durable. Irving Fisher's theory of interest rates relates the nominal interest rate i to the rate of inflation and the "real" interest rate r. The real interest rate r is the interest rate after adjustment for inflation. It is the interest rate that lenders have to have to be willing to loan out their funds. The relation Fisher postulated between these three rates is: (1+i) = (1+r) (1+) = 1 + r + + r This is equivalent to: i = r + (1 + r) Thus, according to this equation, if increases by 1 percent the nominal interest rate increases by more than 1 percent. This means that if r and are known then i can be determined. On the other hand, if i and are known then r can be determined and the relationship is: 1+r = (1+i)/ (1+) or r = (i - )/ (1+) When is small then r is approximately equal to i-, but in situation involving a high rate of inflation the more accurate relationship must be taken into account (Bawerk 2010).

Interest Rate: Interest is defined in various ways. The amount which is paid at the time of using capital is called interest. When the amount of payable interest to the capital is presented in percentage, it is called interest rate. Fischer states that interest rate is the percentage of payable bonus based the money on a fixed date. Indeed, interest rate is a kind of charge to be paid for a loan. It is also the most important and effective factor reinforcing a national currency (Mohammad Masah 2009). Inflation Rate: Researches done on developed and some newly appeared economies show that despite the increase in global price of raw materials such as oil, steel, and making extending monetary policies in most of countries, the price levels have increased less and inflation rate have been less than predicted values. In other words the Aust. J. Basic & Appl. Sci., 5(12): 1371-1378, 2011 1374 common models of predicting inflation have been estimated more than their real situation (Tayebnia & Zandieh 2009). Many surveys have been done by researchers to identify the reasons for inflation in Iran economy. All of them concluded that liquidity volume is a main factor in formation of Iran inflation. Other researchers such as Bahman Oskooi (1994), Bafekr (1998), Tavakoli (2003) dont consider liquidity as a factor of inflation. However, they acknowledge its effect on inflation. In empirical research, they applied econometric models to test the relation between inflation rate and other determining parameters such as liquidity (Hadyan and Pars 2008). Empirical Studies: Piter Abdullah et.al (2010) made a contrastive study regarding the relation between inflation rate and real currency rate in member countries of South East Asian Union, and European and

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Northern American Union during 1991-2005. their findings are divided into 2 following categories: - There is a strong relationship between inflation and real currency rate in Asian Countries but this rate drastically in European and North American Union. - Asian financial crisis seems to have local effect, but they havent had a significant effect on currency rate in European and North American union. The results emphasize on the significance of managing inflation as an economic factor. Utami and Inanga (2009) studied the relation between currency/interest/inflation rates in Indonesia. They studied various interest rate on currency rate base on Fischer International Effect Theory, and inflation rate on interest rate based on Fischer effect theory, and compared America, Japan, England, Singapore with Indonesia (as a home land) during 2003-2008. they concluded that Fischer international effect theory is effective for that but it is not remarkable for England, Singapore and America. Also interest rate changes have a very negative effect on currency rate changes in Japan. Therefore Fischer effect theory does not work in Japan because when local interest rate is higher than international one, the foreign currency decreases but it is not true in Japan. The researchers finally announced that inflation rate changes have positive effect on interest rate changes, so by any increase in inflation rate, the interest rate changes also increase. In means Fischer effect theory for inflation rate and interest rate changes in Indonesia does not exist contrary to the 4 foreign countries including America, Japan, Singapore and England. Edrem Gul and Aykut Ekinci (2006) studied the relation between nominal interest rate and inflation rate in Turkey. They tried in their research

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article to investigate economic status of Turkey during 1984-2003 by applying monthly observations and frequency percentage. The results showed a relation between nominal interest rate and inflation rate in a unique and guided way, interest rate nominal interest rate determines future path of inflation. Masao Ogaki and Julio Santaella (2005) empirically studied the effects of interest rate on currency rate in Mexico and found that 1-month and 3-month interest rate fluctuation in Mexico has a reverse effect on currency rate.

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CHAPTER THREE METHODOLOGY The existing research is an applied one in views of objective, and regressive in view of function. Inductive method is also used in this research. So that to test the research hypothesis, some annual data are applied and after testing, their results are studied by confirming or rejecting the hypothesis. Moreover, the findings can be generated to the whole statistical society. To test the research hypothesis, econometric methods are applied, and SSPS software is used for data analysis. Statistical Society: The statistical society of this study is Kenyan economy. We applied our considered data and statistics to find the relation between interest rate and inflation with the help of Fischer international effect theory and Fischer effect theory. Then the tests are studied according to Kenyan economy. Sample Volume: This research is done regarding the objectives of Kenyan economy. The entire statistical society have is Kenyan economy and no sampling was done because time series data were applied for 1991-2009 on a yearly basis. Data Collection Method: Here, two methods were applied: library and attributive data. They were collected from economic statistics of Kenya Bureau of statistics. HYPOTHESIS There is a strong and positive correlation between Inflation rate and 1-year interest rates.

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CHAPTER FOUR DISCUSSION AND CONCLUSION: The main objective of this research is to answer this question: is there a relation between interest rate and inflation in Kenyan economy based on Fischer international theory economy based on Fischer international effect theory?

Inflation is a function of average yield rate of 91 - day treasury bill, the rate for commercial banks loans and advances (weighted average), overdraft rates, inter-bank rates, savings (commercial bank rates) Let I T R O r S = = = = = = National Inflation Rate Average yield rate of 91 - day Treasury bill The rate for commercial banks loans and advances (weighted average) Overdraft Rates Inter-bank rates Savings (commercial bank rates)

I f (T , R, O, r , S )
Therefore: I =

0 1T 2 R 3O 4 r 5 S
29.23 1.12T 0.16R 0.36O 0.36r 0.60S

From Table 1, the analytical model can be presented as: I =

Table 1: Analytical coefficients

COEFFICIENTS(a) Unstandardized Coefficients B 1 (Constant) AVERAGE YIELD RATE 91 DAY TREASURY BILL (Constant) 10.96196 0.405734 21.11735 Std. Error 1.159905 0.086033 4.04927 0.817974 Standardize d Coefficients Beta 9.450745 4.71602 5.215101 1.3E-06 0.000634 0.000393

Model

Sig.

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AVERAGE YIELD RATE 91 DAY TREASURY BILL RATE FOR COMMERCIAL BANKS LOANS AND ADVANCES (WEIGHTED AVERAGE) 3 (Constant) AVERAGE YIELD RATE 91 DAY TREASURY BILL RATE FOR COMMERCIAL BANKS LOANS AND ADVANCES (WEIGHTED AVERAGE) OVERDRAFT RATES 4 (Constant) AVERAGE YIELD RATE 91 DAY TREASURY BILL RATE FOR COMMERCIAL BANKS LOANS AND ADVANCES (WEIGHTED AVERAGE) OVERDRAFT RATES INTER-BANK RATES 5 (Constant) AVERAGE YIELD RATE 91 DAY TREASURY BILL RATE FOR COMMERCIAL BANKS LOANS AND ADVANCES (WEIGHTED AVERAGE) OVERDRAFT RATES INTER-BANK RATES SAVINGS (COMMERCIAL BANK RATES) a Dependent Variable: KENYA CPI

0.778571

0.1606

1.569626

4.847905

0.000673

-0.89727 18.45336 0.777611

0.347938 5.097597 0.162474

-0.83496

-2.57883 3.620012

0.027472 0.005572 0.000993

1.56769

4.786058

1.136226 -1.87054 23.35847 0.625018

2.342466 2.130283 4.287526 0.136085

1.057316 -1.89467

0.485055 -0.87807 5.448006

0.639225 0.402737 0.00061 0.001772

1.260057

4.59286

-0.39696 -0.71436 0.227525 29.23127 0.556718

1.874772 1.680839 0.083423 4.764346 0.122262

-0.36939 -0.72357 0.631361

-0.21174 -0.425 2.727376 6.135422

0.837606 0.682038 0.025951 0.000474 0.002625

1.122362

4.553491

0.167384 -0.3511 0.130478 -12.9526

1.63944 1.458698 0.08738 6.645921

0.155759 -0.35563 0.362065 -0.5985

0.102098 -0.24069 1.493223 -1.94895

0.921542 0.81669 0.179017 0.09231

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Table 2: Model Summary

MODEL SUMMARY Model 1 2 3 4 5 R 0.817974 0.895128 0.903846 0.951388 0.968766 R Square 0.669082 0.801254 0.816937 0.90514 0.938508 Adjusted R Square 0.638998 0.761505 0.755916 0.85771 0.894585 Std. Error of the Estimate 1.840568 1.496017 1.513446 1.155539 0.994602

Model 1 Regression Residual Total 2 Regression Residual Total 3 Regression Residual Total 4 Regression Residual Total 5 Regression Residual Total

ANOVA(f) Sum of Squares 75.35 37.26 112.61 90.23 22.38 112.61 92.00 20.61 112.61 101.93 10.68 112.61 105.69 6.92 112.61

df 1 11 12 2 10 12 3 9 12 4 8 12 5 7 12

Mean Square 75.35 3.39 45.11 2.24 30.67 2.29 25.48 1.34 21.14 0.99

F 22.24

Sig. 0.00

20.16

0.00

13.39

0.00

19.08

0.00

21.37

0.00

As given by the model inflation is significantly influenced by the average yield rate of 91 - day treasury bill, the rate for commercial banks loans and advances (weighted average), overdraft rates, inter-bank rates as well as savings (commercial bank rates). When every explanatory variable is zero, the autonomous value remains as 29.23 meaning that, when all other factors are held constant and for the period covered, the inflation index remained 29.23. The results indicates that, an increase in the average yield rate of 91 - day treasury bill by one (1) unit would lead to an increase in inflation by 1.12 units. At the same time, when the rate for commercial banks 16

loans and advances (weighted average) is raised by a unit, inflation goes up by 0.16. Conversely, if overdraft rate was increased by 1 unit, the inflation rate reduces by 0.36 as opposed to interbank lending rate which would lead to increase in inflation rate by 0.36. The results finally reveals that, the more the savings at commercial bank rates, the less the inflation (that is, an increase in the savings at commercial banks rate by 1 unit would lead to decrease in inflation by 0.6 units. Further analysis (see Table 2) indicates the five explanatory variables (i.e. average yield rate of 91 - day treasury bill, the rate for commercial banks loans and advances (weighted average), overdraft rates, interbank rates as well as savings (commercial bank rates)) collectively explain 93.85% of any change in the inflation. The remaining 6.15% is explained by other variables (intervening variables) that are not captured in the model.

The results from the tests show 2 general items: 1- There is negative and reverse relation between interest rate and currency rate. 2- There is a direct and positive relation between inflation rate and interest rate. According to the results, there is a reverse and negative relation between interest rate and currency rate. So, increased interest rate will cause decreased currency rate. It should be mentioned that higher interest rates will boost and support equal rate of currency rate, so by increasing interest rate we will have more attractive depositing and investment in our country which is called hot money flow. The results show that interest rate can be considered to control currency rate in Iran economy. Central Bank is said to increase money supply, decrease interest rate and consequently decrease exchange rate very soon. So, should general price level go up due to higher money supply, currency rate will decrease in a long run and with slow exchange rate. On the contrary, there is a direct relation between inflation rate and interest rate. Since all traders of money markets look carefully at general increase in prices and inflation factors, one of the best methods to fight inflation is increasing interest rate and the results of this
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research acknowledge it. So, Central decreases interest rate when some inflation indexes reveal a number of signs of decreasing general prices.

REFERENCES Alvarez, Fernando and Andrew Atkeson. 1997. Money and Exchange Rates in the GrossmanWeiss-Rotemberg Model. Journal of Monetary Economics, 40: 619-640. Alvarez, Fernando, Andrew Atkeson, and Patrick Kehoe. 2000. Money, Interest Rates, and Exchange Rates with Endogenously Segmented Asset Markets. Federal Reserve Bank of Minneapolis working paper. Brock, William A. 1974. Money and Growth: The Case of Long-Run Perfect Foresight. International Economic Review, 15: 750-777. Carlstrom, Charles T., and Timothy S. Fuerst. 2000. Forward-Looking Versus BackwardLooking Taylor Rules. Federal Reserve Bank of Cleveland working paper. Christiano, Larence J., and Martin Eichenbaum. 1992. Liquidity Effects and the Monetary Transmission Mechanism. American Economic Review, 82: 346-353. Clarida, Richard, Jordi Gali, and Mark Gertler. 1999. The Science of Monetary Policy: A New Keynesian Perspective. Journal of Economic Literature, 37: 1661-1707. Grossman, Sanford J., and Laurence Weiss. 1983. A Transactions-Based Model of the Monetary Transmission Mechanism. American Economic Review, 73: 871-880. Lucas, Robert E., Jr. and Nancy L. Stokey. 1987. Money and Interest in a Cash-in-Advance Economy. Econometrica, 55: 491-513. McCallum, Bennett T. 1988. Robustness Properties of a Rule forMonetary Policy. Carnegie18

Rochester Conference Series on Public Policy, 29: 173-203. Occhino, Filippo. 2000. Heterogeneous Investment Behavior and the Persistence of the Liquidity Effect. University of Chicago doctoral dissertation. 17 Rotemberg, Julio J. 1984. A Monetary Equilibrium Model with Transactions Costs. Journal of Political Economy, 92: 40-58. Sargent, Thomas J., and Neil Wallace. 1981. Some Unpleasant Monetarist Arithmetic. Federal Reserve Bank of Minneapolis Quarterly Review. Sidrauski, Miguel. 1967. Rational Choice and Patterns of Growth in a Monetary Economy. American Economic Review, 57: 534-544. Svensson, Lars E.O. 1999. Inflation Targeting as a Monetary Policy Rule. Journal of Monetary Economics, 43: 607-654. Taylor, John B. 1993. Discretion Versus Policy Rules in Practice. Carnegie-Rochester Conference Series on Public Policy, 39: 195-214.

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APPENDICES Appendix I: INTEREST RATES

INTEREST RATES AVERAGE YIELD RATE 91 - DAY TREASURY BILL 2.28 2.77 3.26 5.35 8.95 8.99 9.23 11.93 14.8 16.14 17.9 20.56 19.7 17.8 RATE FOR COMMERCIAL BANKS INTERSAVINGS LOANS AND ADVANCES OVERDRAFT BANK (COMMERCIAL (WEIGHTED AVERAGE) RATES RATES BANK RATES) 13.87 13.69 1.16 1.45 13.69 13.6 1.25 1.37 13.92 13.68 4.08 1.39 13.88 13.72 5.56 1.38 13.91 13.59 8.3 1.37 14.13 13.88 8.54 1.37 14.32 14.28 15.55 1.37 14.79 14.64 7.4 1.34 15.21 14.87 14.67 1.33 18.48 18.56 28.72 1.41 20.04 20.2 22.14 1.59 19.54 20.38 19.39 1.62 20.28 20.53 18.48 1.69 20.34 20.52 23.77 1.72

PERIOD Dec-10 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

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APPENDIX II: INFLATION RATE

Inflation Rates NAIROBI LOWER INCOME 11.04 14.04 13.97 15.96 16 17.17 17.97 19.58 20.62 20.63 20.27 17.8 16.5 NAIROBI MIDDLE INCOME 5.35 7.55 8.74 9.57 10.15 11.28 12.42 14.33 15.57 15.75 14.07 13.15 12.56 NAIROBI UPPER INCOME 5.38 6.39 6.18 10.14 11.67 12.92 13.15 14.48 13.99 13.69 11.56 11.09 10.87 PROVINCES NAIROBI EXCEPT KENYA COMBINED NAIROBI CPI 9.91 8.99 9.19 12.39 11.92 12.05 12.88 13.31 12.95 14.65 14.66 14.49 15.58 16.29 15.53 16.89 17.37 16.65 17.88 17.91 17.32 18.77 19.45 18.91 19.09 20.09 19.72 18.6 18.73 18.93 18.49 18.18 18.31 16.48 16.85 16.7 15.39 15.77 15.61

PERIOD Mar'11/Mar'10 Apr'11/Apr'10 May'11/May'10 Jun'11/Jun'10 July'11/July'10 Aug'11/Aug'10 Sep11/Sep10 Oct11/Oct10 Nov11/Nov10 Dec11/Dec10 Jan12/Jan11 Feb12/Feb11 Mar12/Feb11

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