Businesses widely attributed weaker sales to reduced customer spending as higher prices erode purchasing power Kenya’s private sector activity remained in contraction territory in April, as rising fuel costs and broader price pressures continued to squeeze businesses and weaken consumer demand.
Kenya’s private sector activity remained in contraction territory in April, as rising fuel costs and broader price pressures continued to squeeze businesses and weaken consumer demand. The latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI) shows, the headline PMI inched up to 49.4 in April from 47.7 in March, signalling a second consecutive month of deteriorating business conditions.
The marginal improvement points to a private sector still grappling with cost shocks, particularly those linked to elevated global fuel prices, which have filtered through to transport, production and overall operating expenses. Survey data shows that both output and new orders declined for the second month running, reflecting subdued demand across key sectors including wholesale and retail trade, agriculture and services.
However, the pace of contraction eased compared to March, offering a tentative sign that the worst of the slowdown may be moderating. Businesses widely attributed weaker sales to reduced customer spending as higher prices erode purchasing power. The inflationary pressure has been largely driven by increased fuel costs, partly linked to geopolitical tensions in the Middle East, which have disrupted global energy markets and supply chains.
“Concerns about rising costs, tied to higher transport costs and the ability to secure supplies, weighed on output and new orders,” said Standard Bank economist Christopher Legilisho. Cost pressures intensified sharply in April, with input prices rising at the fastest rate since December 2023.
More than 18 percent of surveyed firms reported higher expenses, driven by fuel, shipping charges and material shortages. In response, companies passed on these costs to consumers, with output prices increasing at the quickest pace in nearly two-and-a-half years.
This marks a shift from March, when firms had attempted to absorb some of the cost increases to protect demand.