Consumer outlook in Congo fluctuates as rising costs reshape spending priorities

Kasi Insight's Index of Consumer Sentiment (ICS), which tracks consumer perspectives on economic conditions at both national and household levels across 20 African markets, demonstrated considerable volatility in Congo between January 2023 and May 2024. The ICS began strongly at 25 in January 2023, rising to 28 in February before experiencing a sharp drop to -6 in March, signaling a period of economic uncertainty. A significant rebound followed, with the ICS peaking at 62 in October 2023, likely due to positive economic developments or effective policies. However, this optimism did not last, as the ICS declined to 21 in November and dipped into negative territory in December at -9. The fluctuating trend continued in 2024, with the index dropping further to -11 in January and hitting a low of -17 in February. Though March saw a neutral value of 0, a modest recovery occurred in April with a value of 12, only for the ICS to plunge once again to -18 in May, reflecting renewed consumer pessimism.

The Index of Current Conditions (ICC) followed a similar unstable pattern, peaking at 33 in October 2023 but remaining negative for much of the observed period, notably falling to -54 in February 2024. The Future Expectations Index (ICE) also fluctuated dramatically, reaching a high of 73 in October 2023 before dropping sharply to -13 by May 2024. These substantial declines in both current conditions and future expectations suggest that consumers faced increasing concerns about present economic challenges and the uncertain future, underscoring the volatile nature of economic sentiment in Congo.

While consumers are facing mounting pressures in housing and utilities, other categories are stabilizing

Kasi Insight's Cost of Living Tracker, which assesses the impact of rising costs on Congolese consumers and their coping strategies, shows significant shifts in price perceptions across various sectors between Q4 2023 and Q1 2024. Housing and rent saw the largest increase, with 82% of consumers reporting price hikes in Q4 2023, rising to 93% in Q1 2024, an 11% jump. Utilities followed closely, with a 12% increase, as 84% of consumers reported higher costs compared to 73% in the previous quarter. Household furniture also saw a moderate rise, with a 5% increase from 74% to 79%, while education, a critical sector, experienced a 4% increase, moving from 83% to 88%.

However, not all sectors saw rising perceptions of price hikes. Alcoholic beverages experienced the most significant drop, with 63% of consumers feeling the pinch in Q4 2023, falling sharply to 47% in Q1 2024, a 16% decrease. Transportation saw a more modest 4% decline, with perceived price increases falling from 82% to 78%. Airtime and data bundles saw a slight increase of 4%, but other categories like food & beverages and recreation showed small decreases of 3%, reflecting slight relief in consumer spending in these areas. These mixed results indicate that while consumers are feeling increased pressure in critical areas like housing, utilities, and education, some discretionary spending categories, such as alcoholic beverages, transportation, and recreation, have seen easing price pressures.

There is a growing emphasis on delaying purchases and seeking discounts

Consumer adaptation strategies in Congo during this period reveal significant changes as consumers adjust to rising prices. The percentage of people delaying non-essential purchases jumped from 53% to 74%, reflecting a growing trend of postponing discretionary spending to better manage finances. Similarly, the number of consumers actively searching for sales and promotions increased from 54% to 73%, indicating a stronger focus on finding bargains amid economic pressures.

Opting for cheaper alternatives or brands also rose significantly, with 56% of consumers now choosing cost-effective options, up from 42%. Additionally, reliance on personal savings to cover expenses grew from 23% to 28%, underscoring the increased financial strain and the need to dip into savings. Changes in purchasing habits rose from 21% to 27%, signaling further adjustments in consumer behavior to adapt to higher costs. On the other hand, lifestyle changes aimed at reducing costs saw a slight drop, from 26% to 23%, suggesting that many consumers have already made significant adjustments and may have limited room for further changes. The use of community services remained relatively stable, with only a small decrease from 10% to 9%.

Value brands have a strong opportunity to gain market share during this economic strain, while premium brands will need to adapt their strategies

For both value and premium brands in Congo, the economic volatility reflected in Kasi Insight's Index of Consumer Sentiment (ICS) suggests differing prospects. As economic uncertainty grows and the ICS fluctuates, more consumers are delaying non-essential purchases and shifting toward more affordable options. The data shows a significant increase in the number of consumers opting for cheaper alternatives, which presents a major opportunity for value brands. These brands, which emphasize affordability without sacrificing quality, are well-positioned to cater to consumers who are prioritizing essential purchases and looking for ways to stretch their budgets. The growing emphasis on finding discounts and deals further strengthens the case for value brands, as they align with the consumers' increasing sensitivity to price.

In contrast, premium brands are likely to face a more challenging environment as consumers become more cautious with their discretionary spending. The ICS decline, alongside the rising trend of delaying purchases and relying on savings to manage expenses, suggests that premium goods may be seen as less of a priority in the current economic climate. While premium brands typically offer superior quality and status, they may need to adapt by offering promotions or diversifying their offerings to include more accessible product lines. With consumers having already made substantial cutbacks, further adjustments may be difficult, making it harder for premium brands to thrive without more aggressive strategies to maintain consumer engagement.

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