Kenyans shrug off inflation as they shop for festivities
Christmas festivities have caused Kenyans to shrug off the tough economic times to splurge on shopping, holidays and travel.
Businesses have benefited from increased spending by consumers in holiday celebrations, defying projections of slow business based on high inflation.
Retail chains Nakumatt Holdings and Uchumi Supermarkets, airline Fly540, hotels like TPS Serena and Diani-based Leisure Lodge Resort are among companies in the consumer goods and tourism markets that recorded improved sales in December.
However, dealers in luxury goods like high-end cars and clothing recorded sluggish sales.
Month-on-month inflation has more than tripled from 5.4 per cent in January to 19.7 per cent last month, driven by reduced food production, high fuel prices and a fluctuating shilling. This has seen the prices of goods and services rise by considerable margins.
“We have recorded a net growth rate of 10 per cent this month, compared to last year despite the prevailing economic challenges,” said Atul Shah, Nakumatt’s managing director. “We are currently doing very well against our December target of Sh4 billion.”
He attributed the growth in turnover to the opening of new outlets locally and in the region and sales promotions that have increased customer traffic. Necessities such as food, beverages, personal care items and clothing were the most popular purchases followed by electronic items like TVs, stereos, and DVD players.
Mr Shah’s views were shared by Jonathan Ciano, chief executive of listed retail chain Uchumi who said consumers were shrugging off the high cost of living to raise their expenditure for the holidays.
Despite household budgets taking a squeeze, operators of luxury tourism destinations are recording booming business, signalling resilience of the country’s middle class spending.
“We are completely booked from the last week of December to the first week of January,” said John Mutua, the chief executive of Diani-based Leisure Lodge Resort that has 270-room capacity.
He said travel advisories following a series of abductions of foreign tourists have kept off many tourists from external markets, with locals accounting for 60 per cent of the guests.
“Bookings for this holiday season are good but they came rather late compared to previous years when people would book one to two months in advance,” said Mahmud Janmohamed, CEO of Serena chain of hotels.
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