Kenya registered a decline of 1.5 percent in the overall consumer spending index between July and September 2023.
This was disclosed Tuesday when ICEA LION Asset management launched the ILAM consumer spending index themed ‘Consumer spending relatively resilient the third quarter of 2023.’
Speaking at the event at ICEA LION, asset management head of research (HR) Judd Murigi stated that the index is aimed at tracking consumer spending so as to gauge how the real economy is trending.
He stated that it was based on interviews of 500 consumers and 100 retail businesses in the greater Nairobi area.
Murigi further added that the individual sub-index fell by 3 percent between July and September 2023, while the retail business sales sub-index remained broadly flat in the same period, which resulted in a decline of 1.5 percent in the overall consumer spending index (which is weighed 50 percent by changes in individual spending and 50 percent by changes in retail business sales).
“This was a relatively resilient level of consumer spend in the 3rd quarter considering the perception that disposable incomes had reduced,” stated Murigi.
However, he stated that many consumers attributed the additional spending to an increase in the cost of items purchased rather than higher income.
“While all categories (executive, skilled and unskilled) had reduced spending levels in the third quarter of 2023, the lower income consumer segment had the largest proportion which is 9 percent experienced reduced personal consumption expenditure in that period,” added Murigi.
He stated that 37 percent of individuals indicated that their income did not change between 2022 and 2023, while 38 percent experienced a decline in income and 24 percent saw their income rise between 2022 and 2023.
Additionally, the large business segment had the largest improvement of 25 percent in sales trends in the third quarter of 2023, followed by the micro business segment at 7 percent better sales trend stated the HR.
He added that the medium-sized businesses segment recorded a fall of 18 percent in sales trends in the same period, while the small businesses segment had similar levels of sales trends in the third quarter.
“Various business sectors including retail stores, clothing and apparel, food and drink outlets, as Well as house fittings and accessories, recorded broadly similar trends in sales between July and September 2023, with no major divergence” noted Murigi.
He stated that the analysis on individual spending trends indicated that 44 percent of consumers had a positive mindset regarding their spending while 56 percent had a negative mindset on their spending trends.
On the business side, 48 percent of businesses appeared to hold positive sentiments regarding sales trends, while 45 percent had negative sentiments regarding their sales, notes HR.
ICEA LION asset management CEO, Einstein Kihanda summarized that consumer spending levels remained relatively resilient between the second and third quarters of 2023.
By Silus Waswa
