Kenya's private sector activity fell for a second month in a row in May, undermined by higher consumer inflation due to a weakening shilling, rising fuel prices and input shortages, a survey showed on Monday.
The S&P Global Kenya Purchasing Managers' Index (PMI) fell to 48.2 in May from 49.5 a month earlier. The 50.0 mark separates growth in activity from contractions.
"The reduction in activity was overwhelmingly due to inflationary pressures, which impacted both operating costs and customer demand," S&P Global said in text accompanying the survey.
The survey said companies cited rising fuel costs, the strengthening of the dollar and shortages of some inputs due to the war in Ukraine as reasons behind the slowdown.
Consumer inflation rose to 7.10% year-on-year in May from 6.47% a month earlier, data from the statistics office showed.
The central bank raised its benchmark lending rate by 50 basis points to 7.50% in late May, warning that inflation risks were elevated due to high global prices of commodities.
The shilling has hit a series of record lows against the dollar this year.
"Economic activity in Kenya contracted for the second consecutive month in May due to inflationary pressures that resulted in a drop in customer demand and a reduction in firms' output," Kuria Kamau, Fixed Income and Currency Strategist at Stanbic Bank, said. (Reporting by George Obulutsa; Editing by Toby Chopra)