Two in three Kenyan firms paid more for inputs in Q3, but only 40% raised prices, CBK says

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Nearly two in three Kenyan companies paid more for raw materials, fuel and transport between July and September, but only about four in ten passed the cost on to customers, the Central Bank of Kenya’s latest survey of chief executives shows.

In the September 2026 CEOs Survey, 65.8% of the 600 private-sector firms polled said their purchase prices rose in the third quarter compared with the second. Just 39.7% said they raised their selling prices, while 52.6% kept them unchanged and 7.7% cut them. CBK said firms “balanced cost recovery against weak demand”, which means many are taking the hit on their margins rather than risk losing customers.

For readers, the takeaway is simple: shop prices have so far risen more slowly than business costs, but the gap is a strain that firms say they cannot carry forever.

Why costs went up

The CEOs blamed higher fuel, transport, import and other input costs. The conflict in the Middle East remained their biggest outside worry, with de-escalation expected to ease fuel and freight costs. Petrol rose to KSh226.96 a litre in Nairobi in the October EPRA review, and an IMF analysis found Kenya passed 62% of the diesel price rise on to motorists.

Business activity in the quarter was mixed. Some 38% of firms reported higher demand and orders, 34% reported higher sales and 29.5% produced more, but between 22% and 30% of respondents reported declines on each measure. Drought, raw material shortages, low tea output and rising input costs held back production.

Jobs held steady, but some firms are cutting

Full-time employment was broadly stable: 79.6% of firms kept staff numbers unchanged in the quarter, 7.2% hired and 13.2% cut jobs, with some firms reducing staff in response to rising costs and subdued demand. For the October to December quarter, 12.9% expect to shed workers against 12.2% planning to hire, while 74.8% expect no change as they try to contain labour costs.

What firms expect for the festive quarter

CEOs are more upbeat about the last three months of the year. Some 55.9% expect more orders and 55.2% expect higher sales, citing festive spending, hotel bookings and social events. But 47.9% expect purchase prices to keep rising, while only 30.3% plan to raise their own prices. Most (62%) expect to hold selling prices steady because competition and weak demand limit how much they can pass on.

Credit is cheaper, but still hard to get

Some 37.7% of firms said interest rates on their loans had fallen, following the CBK’s easier policy stance; the central bank held its rate at 8.75% this month. Still, 26.7% described access to bank credit as difficult or very difficult, against 30.2% who found it easy. Most firms still fund operations from their own cash and retained profits, blaming high collateral demands, slow approvals and paperwork.

Many have room to grow without new investment: 37.2% said they were running below capacity and could absorb a sudden rise in demand, while 44.5% were close to full capacity.

What CEOs want from the government

The respondents listed six fixes: lower levies, licence fees and compliance costs; cheaper and simpler credit, especially for small businesses; predictable tax and regulatory policy with proper consultation; one-stop national and county permits and faster import clearance; stronger governance and anti-corruption efforts; and lower energy costs with more reliable power.

The survey was conducted between September 7 and 18, 2026, and feeds into the CBK’s Monetary Policy Committee decisions.