Industries Hit as Disposable incomes shrink

Kenya’s sugar closing stocks more than doubled in early 2025 as consumers, grappling with reduced purchasing power, cut back on non-essential spending amid tough economic conditions.

Sugar inventories rose to 20,413 tonnes in February from 9,653 tonnes the previous month, with industry players attributing the slowdown in sales to financial strain among households.

Local sugar prices saw marginal declines despite the surplus.

The ex-factory price fell 0.7 percent to Ksh6,525 per 50-kilogramme bag, while wholesale prices dropped six percent to Ksh6,712.

Retail prices also edged lower, averaging Ksh156 per kilogramme, down from Ksh157 in January.

Kenya’s annual inflation rate rose to 3.5 percent in February from 3.3 percent a month earlier, driven by higher food prices.

The cost of living squeeze was worsened by increased payroll deductions, including a 1.5 percent Affordable Housing Levy, a 2.75 percent Social Health Insurance Fund contribution, and higher National Social Security Fund rates, which saw deductions reach up to Ksh4,320 for those earning KSh72,000.

With net incomes shrinking, many Kenyans prioritised essential expenses such as rent and school fees over discretionary purchases.

For households earning less than a dollar a day, sugar—once a staple—has increasingly become a luxury.

The shift in consumer spending patterns has weighed on industries reliant on disposable income, with the sugar sector among the hardest hit.

ligadwah@businessdayafricanews.org