Business sales dipped in Q4 as Kenyans cut back on Christmas spending
he brunt felt by businesses in the quarter under review could also be a result of the static income trends which dominated during the review period.
Despite expectations that a surge in consumer spending last Christmas would drive business sales for the quarter ending December 2024, a majority of the businesses experienced trends similar to the previous quarter.
This is according to the latest Consumer Spending Index report by financial services provider ICEA Lion, which says the expected lift did not materialise.
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It notes that 60 per cent of retailers surveyed reported an increase in sales, while approximately 40 per cent had lower sales in the quarter.
"This was similar to trends witnessed between July and September 2024, as the expected uplift from the festive season did not appear to materialise," the index report reads.
ICEA suggests that the flat performance might be due to consumers reducing their usual holiday spending, highlighting that retail stores and businesses in the food and beverage sector experienced lower sales in the fourth quarter compared to the third quarter.
It terms the development a surprise, in view of the festive season when sales in these sectors are expected to pick up.
On the other hand, the clothing, retail shopping, and food and beverage sectors witnessed higher sales in the final quarter of 2024 compared to the previous year, while the household fittings and accessories sector saw most businesses report lower sales trends.
Static income
The brunt felt by businesses in the quarter under review could also be a result of the static income trends which dominated during the review period.
The index reveals that 60 per cent of the respondents indicated their income levels at the of end 2024 were at the same level as 2023, while one-quarter of individuals surveyed ended the year with lower incomes compared to the beginning of the year.
"This represented the highest proportion of flat income levels dominating income trends during the year," the index report says.
"However, we also note that the proportion of individuals reporting lower incomes declined to the lowest levels witnessed during the year."
Notably, the real estate and construction sectors had the largest proportion of respondents who had higher incomes compared to 2023, while the wholesale and retail sectors had the biggest proportion of workers whose incomes declined during 2024.
This represented the second successive quarter when the trade sector has led to declining income trends, the index adds in part.
However, generally, the ILAM Consumer Spending Index rose by two per cent in the review period driven by a slight improvement in both individual spending and retail business sales.
Ideally, the index is designed to monitor consumer spending as a reliable indicator of the current state of the real economy.
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