Kenyans Cut Spending on Travel, Dining as Costs Rise

Households have been cutting down on non-essential expenses due to rising costs.

This is in line with a recent survey analyzing the behaviour of Kenyan consumers from April to June. The study by TransUnion revealed that over half of households reduced their spending on non-essential items in the past three months. Millennials and Gen Z suffered the most with 66 and 55 per cent respectively scaling back their spending. In comparison, only 35 per cent of baby boomers made cuts in this category. The main categories that felt the pinch were entertainment, dining out and travel.

To cope with rising consumer costs, individuals have opted to cut back significantly on their expenditure on digital services, subscriptions, and memberships. As indicated, headline inflation has tapered down from 9.6 per cent in October to 7.9 per cent in June, one contributing factor being the decline in food prices. Nonetheless, the rise in fuel prices recently sparked dread for inflation expectations. In October, inflation rose for the second consecutive month to 6.9 percent, compared to 6.8 percent in September and 6.7 percent in August.

Core inflation or inflation excluding food and fuel maintained a steady rate of 3.7 percent in October. The decline in discretionary spending has affected fuel consumption as reflected in the decreased use of personal vehicles. Fuel consumption reached its lowest point in over five years between January and June due to the negative effect of high pump prices on demand. The rise in taxation has contributed to the decrease in household consumption. It has prompted warnings from the World Bank and IMF who caution that it could have a counterproductive effect by reducing demand.