In May, Kenyans reduced their expenditures as inflation-related price rises affected both households and businesses, according to the most recent Stanbic Bank Purchasing Managers’ Index (PMI).
The report shows that companies are transferring costs to consumers, causing families to modify budgets and decrease expenditures on non-necessities.
Economist Christopher Legilisho linked the tightening of household budgets to consumer prudence amid elevated food, fuel and transportation costs.
“Households face financial strain. Companies experience pressure due to escalating costs. Consumers are concerned about increased fuel and transportation expenses, resulting in budgetary constraints that affect spending patterns,” he stated.
Index data revealed that private sector activity contracted significantly as purchasing activity decelerated, with new sales declining for the third straight month at the most rapid pace since July 2025.
“Unfavorable sales trends, cashflow difficulties and cost burdens were primary contributors to diminished purchasing levels, as reported by respondents,” the document indicated.
The decline in new business was most significant in construction and services, while agriculture, manufacturing, wholesale and retail sectors showed slight expansion.
“We observe weakened demand from clients and consumers which is impacting new orders and production,” Legilisho added.
Concurrently, surveyed businesses across various sectors, including manufacturing, wholesale, retail, construction and services, increased prices at the quickest pace in two-and-a-half years.
Based on the report, companies elevated output prices to safeguard profit margins as input costs surged at the fastest rate since November 2023.
“Inflation accelerated for the third consecutive month and attained its highest level in two-and-a-half years. Underlying data indicated that the overall rise in input costs was primarily due to increased purchase prices,” the report stated.
Overall, the headline PMI decreased to 46.6 in May, from 49.4 in April, representing the most rapid deterioration in private sector performance since July 2024 and affecting both consumers and business finances.