Consumer spending in Nairobi dips 1.5pc, study shows

Consumer spending in Nairobi and its surrounding areas declined by 1.5 per cent in the third quarter of last year, reflecting a dip in disposable income and higher prices of goods and services in the real economy, new study has revealed.

The study was the first to be conducted by ILAM Consumer Spending Index launched yesterday. ILAM Chief executive Einstein Kihanda said 500 consumers and 100 retailers were interviewed between July and September last year.

“This is the inaugural index, which we will be presenting every quarter to track spending across various items across the country. This first survey covered Nairobi and its outskirts,” he said.

Kihanda said the individual spending sub-index fell by 3 per cent, while the retail business sales sub-index remained broadly flat, resulting in a decline of 1.5 per cent in the overall consumer spending Index.

He observed that though the overall index declined by 1.5 per cent due to the increased cost of various items, it was moderated by the higher spending of large businesses, especially supermarkets which had promotions and discounts to attract customers to buy various goods from their retail outlets.

“The index dropped by 1.5 per cent because of higher prices in terms of various items but was tempered because we saw large businesses increase in terms of spending because they had offers they were making and discounts to the wider public to enable them to purchase various goods from the various retail points,” he said.

The survey showed that sales trends in the third quarter varied by business size. The large and micro businesses segments saw an increase of 25 and 7 per cent, respectively, while the medium businesses segment experienced a decline of 18 per cent. The small businesses segment had no change in sales trends.

It also found that different business sectors, such as retail stores, clothing and apparel, food and drink outlets, and house fittings and accessories, had similar sales trends in the third quarter of 2023, with no significant differences among them.

The study also conducted a sentiment analysis to measure the attitudes and emotions of consumers and businesses regarding their spending and sales trends.

It revealed that the sentiment was balanced, with 44 per cent of consumers and 48 per cent of businesses having a positive mindset, while 56 per cent of consumers and 45 per cent of businesses possessed a negative mindset in the third quarter of 2023.