A recent study has confirmed fears of a steep fall in disposable incomes for Kenyans.
This means that spending in the two month cycle is expected to fall by nearly three-quarters, according to the Retailers Association of Kenya (RETRAK) report.
“The ripple effect of a struggling economy, is a net reduction in disposable income leading to budget cuts at household level,” it reads.
Net spending across November and December is expected to range largely between Ksh. 5,000 and Ksh. 30,000 across the holiday’s cycle.
This is in comparison to a higher average estimated at a maximum Ksh. 90,000 in prior years.
A majority 45 and 35 percent of the population view the prevailing economic environment as very tough and tough respectively.
Only 20 percent of Kenyans held a neutral view on the economic out-turn this year, according to the study conducted in partnership with collaboration with Viffa Consult.
Subsequently, food tops the list of the in season purchases ahead of expenditure on clothes, travel and personal effects.
“The priority list is a reflection on the state of the economy. It has been a tough year with many Kenyans spending on credit terms,” Viffa Consult MD Victor Agolla said.
The economic turmoil is further featured in the report’s finding on the frequency of holiday shopping.
A majority 45 percent of Kenyans have planned their spending after the receipt of the December/November salaries while 25 percent have scheduled their spend to just a few days before Christmas.
From the resulting shift in spending, retailers have too changed tact to raise stocks in food items.
A majority are bulking up an assortment of commonly used food items to lure potential takers particularly in e-commerce.
Insights from the report showed 35 percent of Kenyans feel financially insecure as 41 and 39 percent of respondents marked a drop in money made and accumulated savings respectively.
Kenya’s Gross Domestic Product (GDP) is expected to narrow in the year to 5.9 percent.
Output is weighed down largely by lower consumer demand, credit access constrains and damned productivity in agriculture.
Growth in the first-half of the year has already fallen to a flat 5.6 percent year over year on the back of a false start of farm output under the occurrence of drought earlier in the year.
Private sector credit growth has meanwhile remained in the shadows of its years of boom in spite of peaking at a notable 6.6 percent at the end of the third quarter of 2019.
Households are expected to hold out for better tidings in 2020 from the expected resurgence of economic growth boosted on one hand by the projected recovery in private credit flow from the November’s repeal of interest rate caps.
The projected recovery in output is expected to find leverage in contained inflation which remains well anchored within the government targeted range of 2.5 to 7.5 percent band in spite of an upward surge in November’s reading to 5.6 percent from a flat five percent in October.
For Citizen TV updates
Join @citizentvke Telegram channel
Video Of The Day: | THE MEKATILILI LEGACY | Mekatilili Wa Menza contributed to Kenya’s independence struggle