Consumer sentiment remains quelled in July despite advancing by a point

Nonetheless, there are still overall concerns on the future state of the economy



  • KASI’s global CCI rebounded by a single point in July after falling by 5 points last month. Whereas the index of current economic conditions rose by 6 points, the index of future expectations dropped by one point.

  • There was a mixed performance across the household indices considered. Though households reported an improvement in general city economic conditions, their perception on general country economic conditions did not change. Nevertheless, households reported a boost in their incomes as the index moved up by 4 points and there was renewed optimism in job prospects with the respective index advancing by 5 points. Despite an increase in the discretionary spending index which climbed 6 points, the purchasing power and personal finance indices deteriorated by 7 and 5 points respectively.

  • With respect to the individual countries, Cameroon, Ghana, Ivory Coast and Kenya all witnessed a heightening in the consumer sentiment indices with Kenya recording the largest gain of 7 points. On the other hand, consumer confidence tumbled in Nigeria, South Africa and Tanzania. South Africa was the worst performer of the month as its index sunk by 14 points maintaining its downward trend observed since April this year.

After declining in June by 5 points, consumer sentiment in Africa ticked up by one point this month rising from 1 to 2. The recovery in the consumer confidence can be primarily attributed to the index of current economic conditions which expanded by 6 points. Meanwhile, the index of future expectations continued with the slump experienced last month as the index dropped by another point this month.



In July, there was a slow down in the monthly rate of change in inflation for some countries. For example, in Ghana, data from the Ghana Statistical Service shows that, between June and July, the monthly inflation rate was 3.1 % which is lower than the inflation rate recorded between May and June which stood at 4.1 % (Ghana Statistical Service, 2022). Additionally, some countries provided support to prevent prices from rising and to protect the purchasing power of their citizens by ensuring affordability of basic commodities. In Cameroon for example, to control the increase in prices of fertilizer that is essential food production, the Ministry of Agriculture and Rural Development put in place plans to support 30 % of the price of fertilizer to help the farmers particularly small-scale farmers (Xinhua, 2022).


On a regional scale, the African Heads of State and Government held a meeting in Dakar with World Bank’s International Development Association where they received a USD 93 billion financing package. This package was to help all African countries “recover on a greener, more resilient, and inclusive path” following the reversals on development gains caused by climate change, food insecurity, the war in Ukraine and internal conflicts, and the Covid-19 pandemic. During this meeting, commitments were made to invest in people, speed up energy transition, accelerate economic transformation to better respond to future shocks, bolster response mechanisms to address food security and step-up the implementation of the African Continental Free Trade Area (World Bank, 2022).


From this, it appears that the falling monthly inflation and support from both national governments and multilateral agencies bolstered households’ perception on current economic conditions. Consequently, overall consumer confidence progressed although by a mere point due to the lingering pessimism across households on their future expectations.


Households’ purchasing power and personal financial situation worsen in spite of higher incomes


There were mixed results in the various dimensions considered with respect to economic and household conditions as revealed by the respective indices. Focusing on the general economic conditions’ indices, the city economic conditions index advanced by 2 points after crumbling in June while the country economic conditions stagnated at the previous month’s level of 13. Further, after two successive months of weakening, the job prospects index grew by 5 points climbing to -47 from -52. On the household indices, there were positive moves for the household income and discretionary spending indices. Following a collapse of 15 points in June, the household income index rebounded by 4 points clawing back some of last month’s losses. Meanwhile, the discretionary spending index shifted back into positive territory after gaining 6 points and ascending to 5 from -1. Unfortunately, regardless of the improvement in incomes, households reported frailties in their purchasing power and personal financial situation. The purchasing power index receded by 7 points sliding from 10 to 3 while the personal finance index waned by 5 points. This suggests that households expect their regular expenses (prices of necessities) to rise faster than their incomes over their next six months which supports the pessimistic view on future conditions as seen in the index of future expectations.


Subsidy programs lead to an improvement in consumer confidence for Kenya while sentiment in South Africa continues to plummet


Turning to the countries tracked in our index, the performance varied across the board. Cameroon, Ghana, Ivory Coast and Kenya were the winners of the month with Kenya leading the way as its index expanded by 7 points from -9 to -2. In terms of the losers, Nigeria, South Africa and Tanzania all witnessed a disintegration in their consumer confidence indices with South Africa undergoing the largest downturn of 14 points.


Consumer sentiment in South Africa has been spiraling since April this year. In fact, South Africa’s consumer confidence index has lost 52 points between March, where it stood at 4, and July, where it currently stands at -48. Both its index of current economic conditions and index of future expectations have faltered in similar fashion. In July, these indices stumbled by 8 and 15 points respectively. Notwithstanding the ongoing global challenges that have affected fuel and food prices, South Africa is facing internal struggles including the impact of the April floods that affected the country’s energy supply and productive capabilities. As a result, the cost of living in South Africa has drastically spiked. Data from Statistics South Africa shows that annual inflation rate rose to a 13 year-high of 7.8 % in July compared to 7.4 % in June. The increase in inflation is primarily associated with a surge in the year-on-year cost of transportation and food both of which escalated by 25 % and 9.7 % respectively. Moreover, unlike Ghana where the monthly inflation rate fell, South Africa’s monthly inflation rate climbed from 1.1 % in June to 1.5 % in July. Ergo, with the exception of the discretionary spending index which grew by 5 points after regressing last month, all the household indices receded this month. Both the general city and country economic conditions indices dwindled by 11 and 16 points respectively while the job prospects index slipped by 21 points. Furthermore, the household income, personal finance and purchasing power indices all plunged by 11, 7 and 32 points respectively. Certainly, this data on household indices follows the general gloom that South African households perceive on both the current and future economic conditions.


Regarding Kenya, the widening of its consumer confidence can be attributed to the index of future expectations which strengthened by 13 points as the index of current economic conditions moved in the opposite direction worsening by 4 points. Despite of Kenya’s consumer confidence index remaining in negative territory, the data shows that this is the largest gain in the index for 2022. Similar to all countries across the continent, Kenya is also grappling with inflation challenges which is being felt by households in the country hence their worries on the current economic conditions. However, the Kenyan government has stepped up its efforts to shield consumers from the impact of rising inflation. At the forefront, the Kenyan government continued implementing its fuel subsidy program to stop fuel prices from increasing at the pump. To add onto this, the government introduced another subsidy program in July that targeted maize flour which is an essential staple for Kenyans. These initiatives paid off slightly as shown by the data from the Kenya National Bureau of Statistics (KNBS) where, although annual inflation climbed to 8.3 % in July from 7.9% in June, the monthly inflation rate declined from 0.9% to 0.7%. Consequently, Kenyan households were more optimistic in July compared to June as the general city and country economic condition indices both soared by 18 points while the job prospects index advanced by one point. The personal finance and household income indices also followed suit with the former gaining 10 points and the latter skyrocketing by 21 points. In spite of the improvement in household incomes, expenditure among Kenyans withered as both the discretionary and household spending indices shrunk by 10 and 3 points respectively. Considering the upcoming August elections, this is no surprise as households would prefer to save the extra income as they await the outcome of the elections.


As real wages are on a slump, retailers, including those targeting the high-end market, may want to consider different product offerings to maintain loyalty


Although we have seen a bounce back in consumer sentiment this month, its growth is not sufficient enough to reverse the downward trend that we have observed in 2022 where, so far, the magnitude of losses in the overall index have outweighed the gains. However, we see that, while inflation is affecting all countries, responses by governments to cushion its citizens from its effects appear to influence households’ sentiment on the economy. This is clear from our analysis of Cameroon and Kenya where both governments have instituted support measures to ensure consumers don’t bear the full brunt of the price hikes which has resulted in positive sentiment among households in these countries.


Nonetheless, there are still overall concerns on the future state of the economy. The results on household income and purchasing power suggests that while households expect their incomes to grow, they believe that their ability to meet regular expenses will worsen at a faster rate meaning that they expect prices to grow much faster than their incomes over the next 6 months. This is indicative of falling real wages among consumers which signals even slower times ahead for retailers. And, even though we have seen an increase in the discretionary spending index this month, it is still subdued in comparison to the levels seen prior to the Ukraine conflict. Therefore, in the face of declining real wages, more consumers, including high-income earners, are going be conscious of pricing and will likely be concerned about affordability of products. As such, retailers who target high-end luxury customers may want to consider offering products that are slightly cheaper but are still of good quality to provide another option for their customers. This could maintain brand loyalty at a time when customer retention is critical for retailers.


“With higher inflation as well as interest rates, any capital-intensive projects that businesses are contemplating, especially those that require financing, may have to be shelved as the cost of the project will almost likely be amplified. At the moment, the focus must be geared towards maintain sales revenue and cost-saving until signs of stability and upward economic mobility emerge.”

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