The overall consumer spending in Kenya dipped 1.5 percent in the third quarter of 2023, Fund Manager ICEA LION has revealed.
Speaking on Tuesday during the launch of the ILAM Consumer Spending Index (ICSI), Judd Murigi, Head of Research at ICEA LION Asset Management said the index is aimed at tracking consumer spending as a gauge of how the real economy is trending.
Murigi noted that findings from the interviews conducted on 500 consumers and 100 retail businesses in Nairobi established that individual spending sub-index fell by 3% between July and September 2023.
On the other hand, the retail business sales subindex remained broadly flat in the same period, resulting in a decline of 1.5% in the overall consumer spending index, halved by changes in individual spending and 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,’’ Said Murigi.
According to him, many consumers attributed the additional spending to an increase in the cost of items purchased rather than higher income.
”At the same time, we also note that the spending came in spite of continued slowed private sector credit,’’ he added.
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While all categories including executive, skilled, and unskilled workers had reduced spending levels in the third quarter of 2023, the lower-income consumer segment had the largest proportion (9%) experiencing reduced personal consumption expenditure.
Income levels were fairly stable with 37% of individuals indicating that their income did not change between 2022 and 2023, while 38% experienced a decline in income and 24% saw their income rise between 2022 and 2023.
On business sales performance, the large business segment had the largest improvement (25%) in sales trends in the third quarter, followed by the micro-businesses segment at 7% better sales trends.
The medium-sized businesses segment recorded a fall of 18% in sales trends in the same period, while the small business segment had similar levels of sales trends in the third quarter.
Similar sales trends were recorded in various business sectors including retail stores, clothing & apparel, food and drink outlets, as well as house fittings & accessories with no major divergence noted.
Murigi further revealed that analysis on individual spending trends indicated that 44% of consumers had a positive mindset regarding their spending while 56% had a negative mindset regarding their spending trends.
On the business side, 48% of businesses appeared to hold positive sentiments regarding sales trends while 45% had negative sentiments regarding sales.
