Otieno Manaseh

The Relationship Between Inflation and Income Inequality in Kenya: an Evaluation of the Microeconomic Effects of Inflation in Kenya Otieno Manaseh

Inflation in Kenya has been a common phenomenon since independence. The focus of this study is to determine whether there exists an empirical relationship between inflation and income inequality in Kenya. The study concluded that though there seemed to be no long run relationship between inflation and income inequality in Kenya, their association was only detectable in periods characterized by shocks in inflationary trends. The study recommends that Kenya as a country should device means of effectively maintaining inflation at low levels. This can be achieved by; reducing government expenditure so as to avoid a situation of deficit monetization to cover for the budget deficit, development in agricultural technology so that the food production ceases to be rain dependent, research and development in the energy sector so that crude oil becomes an alternative rather than the major source of energy in the country. High and sustainable economic growth should be considered paramount in all efforts towards reducing the level of inequality and alleviating poverty.