Prices fall on pandemic constraints but no takers

Prices fall on pandemic constraints but no takers

Central Bank of Kenya Governor Patrick Njoroge. You are walking to the parking lot one afternoon from the office when you bump into a crazy offer of one of those shoes that you always wanted for yourself. Prices have been halved; unbelievable. You are about to pull out your credit card then you remember that you have overdrawn it. Due to the Covid-19 pandemic, your employer slashed your salary by 30 per cent. You are even lucky because many other people that have been laid off. Right now, only bread and butter should be on your mind. You decide to go home, cursing your luck for missing out on such a good offer. Since Covid-19 pandemic landed on Kenya’s shores, prices of various products and financial assets have declined as demand has been gutted. Disposing assets An increasing number of people, distressed by the pandemic, have been disposing of their assets – cars, land, furniture, houses and stocks. Auctioneers have never been busier. Unfortunately, buyers are not there. Reduced income has led to dampening of demand for products and financial assets. This has in turn led to a drop in prices, or low inflation. Inflation has been declining – down from 7.1 per cent in February to 4.36 per cent in June – as people lose their purchasing power, easing pressure on prices of critical consumer products, data from the Kenya National Bureau of Statistics (KNBS) has shown. Since Kenya registered its first case of Covid-19 in early March, stringent containment measures have led to many businesses shutting down. These closures have meant loss of livelihoods for hundreds of thousands of workers. A survey by KNBS that targeted individuals aged 18 and above that was meant to provide information on the effects of Covid-19 on the economy, found that the proportion of individuals absent from work due to pandemic-related challenges was 61.9 per cent in June, up from 49.9 per cent that was recorded in May 2020. Besides there being a situation of less money chasing more goods and services, muted demand, noted the Central Bank of Kenya Monetary Policy Committee (MPC), lower food prices and the impact of the reduction of value-added tax (VAT) have also contributed to inflation remaining within CBK’s target range of 2.5 and 7.5 per cent. “Inflation remains well anchored. Month-on-month overall inflation declined to 4.6 per cent in June from 5.3 per cent […]

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