I enjoy shopping but lately it has become an excruciating activity. A few months ago my favourite brand of yoghurt cost KSh118 per litre. Now it costs KSh134. Bread (800g) used to retail at KSh50 now, it costs KSh63. If you love shopping as I do, that means digging deeper in the pocket - which is painful and cutting on basic items that have now become luxuries because of skyrocketing prices.
An AP story says prices of bread, rice, milk, cooking oil and other basic foodstuffs have sharply increased in the past months in many developing countries, according to a report by the Rome-based Food and Agriculture Organisation. Wheat and rice prices have doubled compared to last year, while those of corn are more than a third higher. Grain prices have risen because of steady demand, especially from China and India, supply shortages and new export restrictions, FAO said.
According to the World Bank, food price inflation is likely to continue through 2008 and 2009. “However, (prices) are likely to remain well above the 2004 levels through 2015 for most food crops,” the bank said.
Kenya's Central Bank report noted an upward adjustment of prices since January 2008 as merchants moved to cushion themselves against higher costs of inputs and rising costs of living, compounded by uncertainties, following the post-election violence.
In February 2008 food and non-alcoholic drinks recorded inflation of 24.9% while alcohol and tobacco recorded 14.1% fuel and power 14.1% and transport and communication 18.5%. Within the food and non-alcoholic drinks category, cooking oil in particular went up by 16.6% in February 2008. “High fuel prices have led to regular upward adjustments in the costs of transport and communication,” said the report.
Apart from food and fuel, in the 12-months to February 2008, inflation for housing and clothing and footwear categories of goods and services rose to 5.9% and 4.4% respectively, from 5.2 and 3.6% in January 2008. Inflation for household goods and services, and medical goods and services increased to 6.9 and 7.7% respectively from 5.4 and 3.6% in the previous month. Recreational, educational and personal goods and services also rose to 6.7 and 5.6% respectively from 2.7 and 4.4% in January 2008.
As the cost of living continues to go up, consumers are becoming conscious of their spending habits. “Before, KSh5,000 was enough monthly shopping for my house but now, the items worth that amount are almost half of what I used to buy. This means I have to cut on some things to ensure I don't exceed KSh5,000,” says Mercy Njeri, a shopper in Nairobi.
Over the weekend, a middle-aged woman at my local supermarket was embarrassed when the items she had picked cost more than the money she had in her purse. The difference was KSh200 more. Fortunately, she was with a friend who bailed her out. Even though she was saved the humiliation of returning some items, the shock and worry in her face spoke volumes.
A check in many retail outlets revealed consumers now walk around with a shopping list and a calculator to ensure that they stick to their budgets. “I cannot even buy ice cream for my kids!” says Njeri.
Marketers on the other hand have a tough job ahead of convincing consumers to spend on their products and services. “Marketers will have to provide more incentives and come up with loyalty programs to win new and retain old customers,” says Tom Sitati, immediate former chairman of the Marketing Society of Kenya and Executive Director of Interbrand Sampson East Africa.
Sitati says companies will focus on the lower end of the market segment. “This will not be the traditional “lower end” as what will happen is that a cautions middle class will start exhibiting buying characteristics of the lower class. This is not to say there will be necessarily less revenue to be generated; it will mean that commitment to consumption will be made on an almost day-to-day basis. Shopping for consumables will not be done monthly but probably every week by many households.”
For consumers in Kenya and probably other parts of the world, shopping is going to be a sad experience, one many would rather avoid - if possible.
