Consumer sentiment in DRC declines as rising inflation reshapes economic outlook

Kasi Insight’s Index of Consumer Sentiment (ICS) in the Democratic Republic of Congo (DRC) reveals a sharp decline from January 2023 to May 2024, reflecting growing economic anxiety as inflation and cost-of-living pressures intensify. Starting at -23 in January 2023, consumer sentiment briefly improved to -14 by February, signaling cautious optimism. However, by September 2023, the ICS plunged to -41, marking a significant deterioration in confidence as households faced increasing financial strain.

This negative trend continued through 2024, with the ICS averaging between -35 and -38 from January to May, underscoring the persistent pessimism among consumers. The Index of Current Conditions (ICC), which measures the present economic outlook, showed a similar downward trajectory, dropping from -37 in February 2023 to -68 in September 2023. The Index of Future Expectations (ICE), tracking consumer confidence in the long-term outlook, also fell sharply, reaching a low of -30 by October 2023. The data indicates a lack of optimism about the future, driven by prolonged economic challenges.

Inflationary pressures on essential goods continue to mount as households struggle to keep up

Between Q4 2023 and Q1 2024, consumers in the DRC continued to face increasing inflationary pressures, particularly in essential spending categories. According to Kasi Insight’s Cost of Living Tracker, the percentage of consumers reporting higher costs for airtime, mobile data, and internet increased slightly, from 87% in Q4 2023 to 90% in Q1 2024.

The cost of food and beverages remained a critical concern, with 89% of consumers reporting price hikes in early 2024, only a slight decrease from 90% in the previous quarter. Similarly, transportation costs surged, with 89% of consumers feeling the strain in Q1 2024, compared to 85% in Q4 2023. Household furniture and appliances saw a notable increase, with 81% of consumers reporting higher prices in Q1 2024, up from 74% in Q4 2023.

Even discretionary categories like alcoholic beverages were not spared, as inflationary pressures rose sharply from 46% to 57% between Q4 2023 and Q1 2024. The cost of living across both essential and non-essential categories is stretching household budgets and prompting shifts in spending behavior.

Consumers adjust their spending habits as inflation persists

As inflationary pressures persist, consumers in the DRC are being forced to adapt. The percentage of households making changes in purchasing habits rose slightly from 55% in Q4 2023 to 57% in Q1 2024, reflecting the need to prioritize essential goods and services. However, fewer consumers reported using community services in Q1 2024 (51%) compared to Q4 2023 (56%), suggesting reduced availability or reliance on these resources.

Interestingly, the percentage of consumers purchasing cheaper alternatives or brands fell significantly, from 52% in Q4 2023 to 44% in Q1 2024. This drop may indicate that many consumers had already shifted to lower-cost options, leaving limited room for further adjustments. At the same time, fewer households are now using their savings to cover expenses, with the proportion falling from 54% to 44%, highlighting the depletion of financial reserves in response to persistent inflation.

Consumers continue to delay non-essential purchases, though this trend saw a slight decline, from 44% to 42%, suggesting that while households are still managing their discretionary spending, many have reached a point where they can no longer postpone purchases indefinitely. The percentage of consumers searching for sales and promotions also dropped from 45% in Q4 2023 to 37% in Q1 2024, likely due to the difficulty of finding meaningful discounts in an inflationary environment.

Value brands are poised for success in Q4 as premium brands may face a challenging market

As we look ahead to Q4 2024, the economic landscape in the DRC presents a significant opportunity for value brands to capture market share. With more consumers prioritizing affordability and shifting towards cheaper alternatives, value-driven companies are well-positioned to meet the growing demand for cost-effective solutions. Brands that offer both quality and affordability will resonate strongly with consumers who are increasingly focused on stretching their budgets.

In contrast, premium brands are likely to face greater challenges as discretionary spending remains limited. To maintain consumer interest, premium brands may need to adopt more agile pricing strategies, such as offering promotions or introducing accessible product lines that align with the economic reality facing Congolese households. With many consumers already depleting their savings and cutting back on non-essential purchases, premium brands will need to adapt to remain relevant in a market where value is increasingly a priority.

As inflation continues to impact essential categories like food and beverages, transportation, and housing, the brands that can align with consumers’ shifting priorities will be best positioned for growth in the final quarter of 2024.

Contact our team today to explore how our consumer intelligence can empower your decision-making process. Win with confidence with Kasi insight. https://www.kasiinsight.com

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