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wavered this month with the index of current economic conditions dipping by 6 points and the index of future expectations collapsing by 11 points . In addition , both the city economic conditions and country economic conditions indices deteriorated this month with the former losing 31 points and the latter worsening by 33 points .
Meanwhile , despite of an increase in the household spending and budget indices by 9 and 6 points respectively , households reported a slump in their incomes as well as expenditure on discretionary items by 7 and 11 points respectively . The job prospects index also slipped for a second consecutive month falling by an additional 2 points in September .
Even though there are positive signs in consumer sentiment and inflation , retailers , especially those in the discretionary goods space , still need to exercise caution in their operations
The gain in consumer sentiment observed this month is the largest that we have recorded thus far in 2022 . However , there is need to curb our enthusiasm on this finding for the following reasons : First , as the global index is an average of the performance of individual countries ’ indices , the expansion in the global index was largely driven by the surge in South Africa ’ s consumer sentiment index .
Second , while this is the biggest increase in the index for 2022 , the level where the index has settled this month is still below the highs for the year .
Lastly , if we examine the movement of the index this year , we notice that there has been no situation where the index has moved in the same direction for successive months i . e . the index has neither risen nor fallen for two months in a row , and so far , the losses have outweighed the gains this year which is indicative of a downward trend in 2022 . Whether this trend will be broken is unknown but these observations clearly illustrate the need for us to be wary of the performance of the index this month .
In spite of this , there are signs of positivity for some retailers in the continent especially those based in countries where inflation is cooling such as those in Nigeria , South Africa and Tanzania . With the prices stabilising , retailers and producers can be able to better manage their costs which will benefit their planning and resource allocation . This also means that the final prices of the products they sell will levelout which will be good for their customers .
But it is clear that , even in these countries where inflation is slowing , households ’ expenditure on discretionary items is still subdued as a significant proportion of their income is allocated towards regular expenses that have become more costly while their incomes have failed to similarly increase . Therefore , retailers in the discretionary goods space need to remain cautious even while inflation is cooling and consumer sentiment is heightening until signs of expenditure on discretionary items are much more favourable .
While slowing inflation is good news for African economies , the current rates are still above the target range for majority of the central banks . This means that central banks are likely to continue raising rates until inflation comes down to the target levels which is bad news for borrowers .
Yannick Lefang is the Founder of Kasi Insight , Africa ’ s leading decision intelligence company empowering business leaders and entrepreneurs to make crucial decisions with confidence . You can commune with him via email at : Info @ kasiinsight . com .
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