Nairobi: Kenya witnessed a 1.5 percent decrease in its overall consumer spending index in the period between July and September 2023. This significant statistic emerged during an event organized by ICEA LION Asset Management on Tuesday, where they launched the ‘ILAM Consumer Spending Index’ themed ‘Consumer spending relatively resilient in the third quarter of 2023.’

According to Kenya News Agency, the head of research at ICEA LION Asset Management, the index was developed to monitor consumer spending patterns to better understand the trends in the real economy. The index, which reflects the spending behavior of consumers and retail businesses in the greater Nairobi area, was derived from interviews conducted with 500 consumers and 100 retail businesses. Murigi highlighted that the index is weighted equally by changes in individual spending and changes in retail business sales.

Murigi reported that the individual sub-index experienced a 3 percent decline, while retail business sales remained mostly unchanged during the same period, cumulatively leading to the 1.5 percent drop in the overall index. He noted that this was a relatively stable level of consumer spending for the third quarter, despite a widespread belief that disposable incomes had decreased. Murigi emphasized that the additional spending by consumers was more attributable to the rising costs of items rather than an increase in income.

Further analysis revealed that 37 percent of individuals reported no change in their income between 2022 and 2023, while 38 percent faced a decrease, and 24 percent saw an increase. Among different income groups, the lower-income segment was most affected, with a 9 percent reduction in personal consumption expenditure. On the other hand, the large business segment showed a 25 percent improvement in sales trends, followed by the micro business segment with a 7 percent increase. However, medium-sized businesses experienced an 18 percent drop in sales, and small businesses maintained similar sales levels as in the previous quarter.

Murigi also highlighted that various business sectors, including retail stores, clothing and apparel, food and drink outlets, and house fittings and accessories, showed similar sales trends during this period, with no significant divergences. In terms of individual spending sentiments, 44 percent of consumers had a positive outlook, whereas 56 percent held a negative view. On the business front, 48 percent exhibited positive sentiments about sales trends, but 45 percent had negative sentiments.

Concluding the event, ICEA LION Asset Management CEO Einstein Kihanda summarized that despite the challenges, consumer spending levels demonstrated relative resilience between the second and third quarters of 2023.