Seven out of 10 households in Kenya’s capital Nairobi are low-income earners, according to the 2024 Economic Survey released this week.
The statistics agency classifies low-income households in the city as those with monthly income below Sh46,355 while middle-income households are those earning between Sh46,356 and Sh184,394 monthly while the rich get more than Sh184,394.
Inflation, an indicator that shows how expensive a basket of goods and services has become over a period, averaged 7.0 percent in Nairobi last year, which was lower than the overall inflation in the country that averaged 7.7 percent.
Despite inflation for the lower income group softening marginally by 0.7 percentage points to 7.4 percent in the year, this cadre was still the worst hit of the three income groups.
An analysis of the data shows that inflation for the middle-income group stood at 6.6 percent while that of the upper income averaged 6.1 percent in 2023.
As a result, low-income households in East Africa’s biggest city were hit hardest by the rising cost of living since a large portion of their income was used to buy food.
Food, housing, water, electricity and transport that consume more than half of the consumer basket, are the biggest drivers to the hard economic times for the city dwellers.
The large share of food and basic needs in the total expenditure increases the vulnerability of low-income households to shocks of food and energy prices.
The prices of essential commodities were not spared by inflation. Sugar, for instance, had a 40 percent price increment followed by electricity (33.1 percent) and maize grain (14.7 percent).
Real wage
The rise in commodity prices while real wages shrank left low-income households vulnerable to the high cost of living as their purchasing power got worse.
The survey also revealed that the transport index increased by 12.2 percent compared to 8.1 percent in 2022, mainly explained by the rise in prices of diesel and petrol.
