Consumer spending habits are changing as people adjust to rapidly rising inflation. According to the authoritative First Merchant Bank (FMB) quarterly guide, consumers are now spending more on food than durables as the inflation rate for food is now between 35 and 40 per cent and is expected to rise by another 10 to 15 per cent by the end of the year.
This behaviour, it says, is typical of a rational society in an inflationary period.
In the past two years many retailers have experienced a very interesting change in consumer spending behaviour during the festive seasons. While November and December were previously the months in which the highest turnover was recorded, November and January have now become the highest sales months for many stores.
A part-explanation for this change is that more and more consumers now prefer to do their shopping in January than in December to avoid ever lengthening queues at banks and building societies. Also employees pay their annual bonuses in November and special sales promotions have become a common feature in January each year.
Prices between February 1991 and February this year rose by 23.1 percent for the higher income group and 37.3 percent for the lower income group.
Drink and tobacco hit the poor most going up by 49.4 percent while clothing and footwear affected the higher income group most as it went up by 48.9 percent.
Food went up by 33.9 percent for the higher income group and 39.6 percent for the lower income group.