Joseph Mutuku sits patiently waiting for customers at his roadside clothes stall in Kitengela, south of Kenya’s capital Nairobi.
Occasionally, he picks a fly whisk and removes dust from his wares before continuing with the waiting. Since late June, Mutuku said the number of people buying his goods, mainly secondhand clothes, has declined to the point that he barely makes any sales.”People are not buying what they consider non-essential. Clothes are essential but you don’t buy them every day,” he said.
Mutuku attributed his plight to the rising prices of many consumer goods in the east African nation amid stifled economic growth due to COVID-19 pandemic disruption. Mutuku is among thousands of small traders in Kenya who are feeling the pinch of rising inflation in the east African nation.
The higher inflation has been fuelled by an increase in domestic taxes on a number of products and disruption of supply chain across the globe due to the COVID-19 pandemic. Among products whose prices have risen due to disruption of the global supply chain are fuel, cooking oil and wheat.
The government starting July also raised taxes on a number of products, including cooking gas and mobile money airtime.Julius Karithi, who runs a construction materials shop in Nairobi, said business has declined in the last month as people adjust to the economic changes. “This is the first time I am witnessing low business since the outbreak of the disease in March 2020,” he said.
Selling up to 200 bags of cement daily at 540 shillings (about 5 U.S. dollars) each previously, the last two weeks have seen him struggle to sell 50 bags a day, according to Karithi. Kenya’s inflation rate rose to 6.32 percent in June, up from 5.87 percent in May. The rise was mainly driven by an increase in prices of commodities that include food, housing, water, electricity, gas and fuels, according to the government agency Kenya National Bureau of Statistics.
Economic analysts expect Kenya’s inflation to maintain a steady climb up, especially due to the enhanced taxation measures whose full impact would be felt from July. “I don’t expect inflation to come down particularly because taxes have increased prices of many consumer goods,” said Ernest Manuyo, a business lecturer at Pioneer Institute in Nairobi. He noted that businesses that deal with products that are considered non-essential would suffer most as consumers make adjustments to their spending.The small businesses are the biggest employers in Kenya. Thus, a decline in business could translate into job losses, said Manuyo.