The Central Bank of Kenya (CBK) projects inflation could peak at 6.2 percent in July 2026 due to the ongoing Iran conflict, which is driving up oil prices.

• Inflation forecast revised upwards to peak at 6.2% in July 2026 if the Iran conflict persists for three months.
• CBK Governor Kamau Thugge cited oil price shock as the primary driver.
• Despite earlier fuel price hikes and VAT cuts, the government has further reduced VAT on petroleum products to 8% to cushion consumers.

China's economy has demonstrated stronger-than-expected growth of 5% in the first quarter, defying global economic disruptions, including the conflict involving Iran.

• Gross domestic product (GDP) rose by 5%, surpassing economists' expectation of 4.8%.
• This growth was achieved despite impacts from the conflict, which began on February 28, affecting global energy supplies.
• Cars and other exports emerged as a "major bright spot," according to Kyle Chan, an analyst from the Brookings Institution, though future impacts remain uncertain.

The Kenyan government has proposed a reduction in Value Added Tax (VAT) on petroleum products, aiming to alleviate consumer costs.

• A proposed cut of VAT on fuel from 16 percent to 8 percent for a period of three months.
• The proposal comes from the Kenyan government, introduced via the Value Added Tax (Amendment) Bill, 2026 in Parliament.
• This move aims to cushion consumers against rising fuel costs, following recent adjustments by the Energy and Petroleum Regulatory Authority (EPRA).