The Purchase Manager Index in Kenya has revealed that private sector activity declined in April, indicating a decrease in customer demand as a result of the rising cost of living. The data which is used to show the level of the general ability of consumers and individuals to spend shows that the PMI dropped below the 50.0 no-change state, falling a full point to 49.5 from 50.5 in March. Readings above 50.0 mean an improvement in business conditions while anything below shows a deterioration.
In April, Kenya experienced worsening shortages of commodities and fuel created by the lingering crisis in Ukraine. As a result, average prices increased at the sharpest rates since 2014. The PMI states also that the most contraction was in the construction, agriculture and services sectors, leading to a reduction in domestic demands as the country saw a significant increase in the price of food and fuel.
Meanwhile, as President Uhuru Kenyatta announced a 12% increase in the national minimum wage, the Federation of Kenya Employers has expressed dissatisfaction with the move, saying that the economic situation of the country does not support a pay raise at this time. The President had on May 1 revealed his administration’s plan to increase wages, arguing that the inflation being experienced made it expedient for the government to step in and provide a buffer. Noting that for over three years there has been no review of the minimum wages while the cost of living has increased with inflation ranging between 5 to 65 annually, the President said the Government has found it necessary to increase the minimum wages,” a statement read.