80% of low-income earners report a drop in earning in past three months - report

Chief Investment Officer at ICEA LION Group, Gerald Gondo/HANDOUT

Nearly eight in ten Kenyans living in urban areas say their income has either stagnated or declined this year, underscoring the strain many households face amid rising living costs and slow wage growth.

The quarterly investor pulse released by ICEA Lion Group, which tracks the spending habits of 1,000 urban consumers across Kenya, illustrates a disconnect between the country’s economic outlook on paper and reality on the ground.

While government data shows that the economy is showing resilience at a macro level, everyday financial realities for many Kenyans remain challenging, with most families unable to afford basic needs.

Most employees interviewed reported that their salaries have been hampered by an increase in taxes and salary cuts as firms struggle to stay afloat.

According to the report, only participants around Eldoret city reported the highest growth in incomes between June and September, even as most respondents said their incomes posted a marginal uptick in the past year.

While employees in the agricultural-rich region reported revenue growth, participants in Mombasa—a port city whose economy is anchored on tourism and import business- said they experienced a dip in incomes during the third quarter of this year.

Overall, over 50 per cent of the participants across Kenya said their earnings remained flat compared to a similar quarter in 2024, reflecting the highest stretch of stagnation in incomes on record this year.

Shrinking revenue, coupled with the rising cost of goods, has made life tougher for families, with one out of three respondents noting that they were spending more than before.

The report shows that this is a change from the previous quarter, when only 25 per cent of respondents said they were spending more because prices were on the rise. 

Kenya's overall inflation stood at 4.6 per cent in September 2025 compared to 4.5 per cent in August, and remained below the mid-point of the target range of 5±2.5 per cent, according to the Central Bank of Kenya.

As salaries for low earners drop, the report notes that the upper middle class and high-income segments had the largest proportion of respondents recording better incomes over the past year.

"Upper middle class and high income segments had the largest proportion of respondents recording better incomes over the past year, while the low income segment had most individuals indicating that their income was lower in the third quarter of 2025 compared to a similar period in 2024," the report reads.

Even with the economic squeeze, the report shows that there was a notable increase in savings, investments, and the purchase of insurance policies.

During the quarter, Saccos, commercial banks, and chamas became even more trusted as ways to build wealth. 

"There was a marginal improvement in the proportion of income allocated to savings, investments and insurance, with Saccos, commercial banks and chamas strengthening their grip on investments."

Additionally, retail sales also made a big comeback, with more than 60 per cent of businesses saying their sales were higher between June and September this year than during the comparable quarter in 2024. 

The sector's health was strongest in retail stores, with Nakuru and Mombasa counties leading the way and Nyeri lagging.

The report notes that this trend was due to foot traffic rather than price increases for three quarters in a row. 

Financial experts at the firm project that the Central Bank's move to cut the benchmark lending rate to 9.25 per cent to drive credit uptake and overall economic growth in the country.

They further note that the strong stock market is driven by higher demand at the Nairobi Securities Exchange (NSE) to attract valuations, improving both foreign and local demand.

"Monetary easing amid stability creates a rare window for investors to anticipate value rather than chase it,” said Gerald Gondo, chief investment officer at ICEA LION Group. 

 “The opportunity lies in positioning early—across fixed income, alternative investments and select equities—to capture the next leg of growth through greater portfolio diversification.”