How do individuals prioritize their spending choices when confronted with inflationary pressure, balancing immediate needs against long-term investments and aspirations? According to a report by SumsureIQ, the high level of inflation in Ghana is changing consumer spending.
The report indicated a change in spending habits and shopping patterns for Fast-Moving Consumer Goods (FMCG) in Ghana. It showed that consumers are increasingly allocating a larger portion of their income towards essential items such as food and non-alcoholic beverages, which are vital for everyday sustenance. Conversely, spending on alcoholic beverages and non-food products appears to be decreasing.
“For example, our retail audit research finds that from January 2024 to March 2024, consumers in Ghana spend about +1% points and +2% points more on food and non-alcoholic beverages respectively compared to January 2023 to March 2023.”
SumsureIQ report
Since 2022, the country has been ‘wrestling’ with soaring inflation rates, hitting a peak of 54.1 percent in December of that year, the highest in 22 years.
However, there was a welcomed downturn in 2023, with inflation dropping to 23.2 percent by December.
In January 2024, there was a slight uptick to 23.5 percent, but it has since subsided again to 23.2 percent by February.
While this downward trend might offer some relief to consumers, the levels remain notably high compared to recent history and neighboring countries, according to the report.
“Additionally, it means that prices are still increasing on the average albeit, at a slower rate of 23.2% as in February 2024,” it noted.
Ghanaians Adapting To High Cost of Living
According to experts and analysts at SumsureIQ, the trend suggests that the typical Ghanaian consumer is adjusting to the challenges of high inflation by focusing on purchasing basic, essential, and life-sustaining food and beverage items.
This means they are actively seeking bargains and value for money during their shopping trips and decision-making processes. “Our research also finds that the main losers in the competition for consumers’ hard-earned incomes in FMCG products are in the non-food and alcoholic beverages,” according to the report.
“For example, our ongoing retail audit research finds that in January 2024 to March 2024, consumers in Ghana spend about -1% points and -2% points less on liquor/alcoholic beverages and non-food respectively compared to January 2023 to March 2023 as shown in the SumsureIQ’s Brand and Performance Index.”
SumsureIQ report
Regarding the report, Dr. Erasmus L Owusu, Founder and CEO of SumsureIQ, highlighted that inflation affects the cost of living for each individual and group of consumers differently.
However, analyzing the data suggests that, on average, the significant inflation levels are influencing the spending and shopping behaviors of all consumers, thus impacting their standard of living in Ghana.
Data Collection Procedure
The report gathers data from more than 100,000 data lines monthly, covering over 70 categories and segments within Fast-Moving Consumer Goods (FMCG). These categories include food, non-food items, as well as alcoholic and non-alcoholic beverages. The data collection spans all 16 regions and encompasses 10 channels or store types throughout the country.
A release by the company said, “This amount of data shows that it had the complete view of the retail market structure and consumer behavior in the country”.
Implications Of High Inflation On the Economy
High inflation can have significant implications for the economy, particularly in terms of investments and the standard of living.
It can reduce the purchasing power of consumers’ incomes, leading to a decline in their standard of living. Essential goods and services become more expensive, impacting affordability and potentially forcing individuals to cut back on discretionary spending.
High inflation also makes it less attractive to save or invest in fixed-income assets like bonds. This can particularly affect those on fixed incomes or with limited resources, exacerbating income inequality and poverty.
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