Many Kenyan households could face increased financial pressure over the next several months as rising living costs threaten to push more people into poverty, according to a new assessment by the World Bank.
In its latest Kenya Economic Update released on Thursday, July 9, the global lender warned that recent increases in the prices of food, fuel and transport could undermine progress that Kenya has made in reducing poverty over recent years.
The impact is expected to be felt most strongly in urban areas where many families depend on regular incomes to meet daily expenses.
The World Bank noted that the ongoing conflict in the Middle East has contributed to inflationary pressures by disrupting global energy markets and pushing fuel prices higher.
As fuel costs rise, the cost of transporting goods and services also increases, making everyday necessities more expensive for consumers.
According to the report, Kenya’s poverty rate could rise by between 2 and 4.5 percentage points by the end of 2026 if the effects of the conflict persist. This could result in an additional one million to 2.4 million Kenyans falling below the international poverty line.
Transport costs have remained significantly high during the year. The report shows that transport inflation rose by 10 per cent year-on-year in April 2026 before easing slightly to 9.8 per cent in June.
Food prices have also remained elevated, with food inflation standing at 8.8 per cent in April and 8.6 per cent in June.
These increases have continued to place pressure on household budgets as families spend more on basic needs.
Speaking during the release of the report, World Bank Lead Economist Tom Bundervoet cautioned that the effects of the Middle East conflict could have a serious impact on poverty levels in the country.
“This conflict could push the poverty rate in Kenya by a certain number of percentage points, which then leads to one million or two million more Kenyans below the poverty line in absolute numbers,” Bundervoet said.
The World Bank also highlighted concerns about employment opportunities in the country. It noted that while approximately 800,000 Kenyans enter the labour market each year, only about 100,000 secure formal jobs. As a result, many are forced to work in informal sectors or low-paying positions that offer limited financial security.
To address the challenge, the lender called for reforms aimed at improving governance, attracting private investment and creating a more supportive environment for businesses. It argued that such measures would help companies expand operations and create more quality jobs.
The report further revised Kenya’s economic growth outlook downward, projecting growth of 4.3 per cent in 2026 and 4.4 per cent in 2027.
In addition to the Middle East conflict, the World Bank identified climate-related shocks and increasing political uncertainty ahead of the 2027 General Election as key risks that could affect the country’s economic performance.