Consumer confidence in Africa improved by four points in March as the index moved from 6 to 10 points. This was caused by an increase in the index of future expectations that improved by 7 points.
This month brought better performance for household indices compared to February. Although the index of household spending experienced a slight decline of one point, the indices of personal finance, discretionary spending, and household income saw notable increases of eleven, two, and four points respectively. On the other hand, the job prospects index decreased by five points, while there were positive improvements of ten and nine points in the general country economic conditions index and the general city economic conditions index respectively.
Considering the performance of individual countries, consumer sentiment declined in three out of the seven countries tracked. These include Cameroon, Ivory Coast and Kenya. The worst performer was Kenya with an index of -5 points while the best performer was Tanzania with an index of 24 points. Interestingly, the index of South Africa improved by 23 points from the previous month.
Breaking the three-month streak, March witnessed a remarkable improvement in KASI Global CCI, ushering in a wave of optimism. The long-awaited upturn was largely driven by a notable 7-point increase in the index of future expectations, setting the stage for a promising path ahead.
Easing inflationary pressures give household indices a boost.
March marked a substantial upturn in household indices, signifying a wave of optimism sweeping across African countries as they entered the second quarter, despite the challenges of inflationary pressures. Impressively, all household indices, except for the purchasing power index, exhibited notable growth. Particularly remarkable, the country economic conditions index witnessed a significant 10-point surge, while the city economic conditions index rose by 9 points, vaulting from 24 to 33. These developments underscore a promising outlook for economic conditions at both the national and city levels.
Despite a marginal decline of one point in the purchasing power index, all other key household indices displayed notable improvements. The household income index witnessed a positive upswing of four points, indicating enhanced financial stability. Moreover, personal finance experienced a remarkable surge of 12 points, highlighting increased confidence in managing monetary matters. Additionally, the discretionary spending index recorded a moderate rise of two points, suggesting a willingness to allocate resources towards non-essential purchases. Additionally, the job prospects index exhibited a notable decline of five points, signaling a slight setback in employment optimism after two months of positive trends. These changes indicate that households prioritized the pursuit of financial freedom as they entered the second quarter of the year.
Kenya’s mounting debt obligations undermine consumer confidence, while Tanzania’s inflation slowdown strengthens confidence.
When considering the countries tracked by our index, Tanzania showcased the highest performance with an index of 24 points, followed closely by Ghana with a commendable score of 20 points. Conversely, Kenya ranked as the poorest performer, recording a concerning index of -5 points, closely followed by Cameroon with an index of -3 points.
Tanzania stands out with an exceptional demonstration of consumer sentiment, propelled by a remarkable 31-point surge in its country economic conditions index. Tanzania’s National Bureau of Statistics reported a year-on-year inflation rate of 4.7%, continuing a trend of disinflation for the second consecutive month. The Bank of Tanzania (BoT), with a target rate of below 5%, anticipates this favorable inflation trajectory will persist throughout the remainder of the year.
Kenya, on the other hand, experienced poor performance, and this can be attributed to an alarming 8-point plunge in the index of current conditions. The government of Kenya faced substantial debt repayment obligations, totaling KES 210.3 billion. This included KES 28.9 billion for coupon payments, KES 65.6 billion for maturities, and KES 115.8 billion for T-Bills. To address these obligations, the government raised KES 159.85 billion through debt issuances, consisting of KES 96.26 billion in T-Bills and KES 63.99 billion in bonds, according to data from the Central Bank of Kenya. However, this left a deficit of KES 50.15 billion that needed to be covered from tax revenues. Consequently, the government found itself obliged to utilize tax revenues to fulfill its domestic debt obligations. However, this action had direct repercussions on the cost of living, as it necessitated the introduction of new taxes. This, in turn, triggered widespread demonstrations among Kenyans who were already grappling with the burdensome and challenging cost of living crisis.
The economic upturn presents lucrative opportunities for retailers to capitalize on.
The growth in household indices signifies a positive shift in consumer sentiment and purchasing power. As economic conditions improve, consumers may feel more confident and willing to spend on affordable products. Retailers dealing with value brands can capitalize on this opportunity by offering competitive pricing, value for money, and promotions that resonate with price-conscious consumers. It is essential for retailers to maintain a wide range of affordable options, ensuring availability and accessibility to attract a broader customer base. They can also focus on highlighting the quality and reliability of their value brands to build trust and loyalty among consumers.
On the other hand, retailers dealing with premium brands may benefit from the overall optimistic economic outlook. As consumers become more optimistic about their financial situations, they may be more inclined to invest in higher-end products and luxury items. Retailers in this segment can leverage the positive consumer sentiment by emphasizing the exclusivity, craftsmanship, and unique features of their premium brands. Providing exceptional customer service, personalized experiences, and creating a sense of luxury and indulgence can help retailers maintain a competitive edge.
Contact our team today to explore how our economic intelligence can empower your decision-making process. Win with confidence with Kasi insights https://www.kasiinsight.com/thehub
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