Kenyans to trim holiday spending on reduced incomes
- The reduction in planned spending comes as Kenyans register reduced gross monthly earnings with the survey’s gross salary distribution revealing a shrinking middle class.
- For instance individuals with gross salaries of between Ksh.51,000 and Ksh.100,000 and Ksh.101,000 and Ksh,500,000 shrink by 10 and 12 per cent respectively.
- The lower than average holiday spending is expected to dampen the return to retailers who largely rely on the festivities cheer to boost annual sales.
Kenyans are set to significantly cut their December holiday spending on lower personal and household incomes occasioned by a dampened economy during the year.
This is according to a new survey dubbed the Kenya 2020 December holiday retail survey by Viffa Consult which assessed spending sentiments among Kenyans.
According to the survey results the bulk of spending has been estimated at between Ksh.5000 and Ksh.30,000 at a higher 84 per cent from 55 per cent last year.
However, the survey reveals a significant drop in projected spending between Ksh.31,000 and 500,000 which fell by a combined 32 per cent to a mere seven percent from 35 per cent in 2019.
“The year 2020 is finally drawing to a close and Kenyans are preparing for the festive season despite experiencing a very challenging year due to the negative economic effects of COVID-19. The ripple effect of a struggling economy despite government intervention through PAYE and VAT relief is a net reduction in disposable income leading to budget cuts at household level,” the survey states.
The reduction in planned spending comes as Kenyans register reduced gross monthly earnings with the survey’s gross salary distribution revealing a shrinking middle class.
For instance individuals with gross salaries of between Ksh.51,000 and Ksh.100,000 and Ksh.101,000 and Ksh,500,000 shrink by 10 and 12 per cent respectively.
This against a one per cent increase in gross incomes above Ksh.500,000 which is indicative of a growing class of richer individuals against the pandemic’s hit on the economy.
The depletion of earners in the middle has seen individuals fall back in lower earning brackets with salary scales of up to Ksh.50,000 increasing by a cumulative 21 per cent year on year.
Food and beverages purchases top the list of desired spending in the holiday season ahead of clothes, toiletries, personal effects and electronics.
Spending on travel is meanwhile expected to dip with 40 per cent of the survey’s respondents expressing fear of travel on perceived risks of contracting COVID-19.
The majority of Kenyans have favoured distributing their holiday spending across the month of December while price discounts have been sighted as the top factor influencing purchasing decisions.
The lower than average holiday spending is expected to dampen the return to retailers who largely rely on the festivities cheer to boost annual sales.
“Retailers in Kenya have experienced business disruption due to depressed disposable income as well as through internal challenges for some retailers,” the survey adds.
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