With the rising cost of living, Nairobi can be a challenging place to live considering a majority of people make very little money.
Although a salary of Sh46,355 may appear to be sufficient, it is difficult to make ends meet on such an income due to the high cost of living and rising inflation. This category of earners being subject to a higher poverty tax is a big concern.
Last year, Nairobi’s yearly average rate of inflation was 7.2 percent, lower than the national average of 7.7 percent. Low-income households in the city, on the other hand, spend the majority of their income on food, therefore the growing cost of living has had the greatest impact on them.
Last year, the cost of living in low-income households rose by 2.1 percentage points to 8.1 percent.
Nairobi’s low-income households spend 61 percent of their income on food, rent, and utilities, compared to 53 percent for residents of other urban districts.
Low-income households are more vulnerable to shocks as a result of rising food and energy prices due to the large share of basic requirements in total expenditure.
The cost of living increased by 6% for middle-income households from 4.2 percent the year before, while it increased by 5.7 percent for high-income households from 4%. According to the statistics office, low-income households in the capital are those with monthly expenditures of less than Sh46,355.
The periodic increases in commodity prices have increased the poverty penalty on low-income households.
For instance, low-income households would need to purchase things in smaller amounts, which results in a higher unit price than buying in bulk. This is due to the fact that although prices for bigger amounts are frequently decreased, they are unable to benefit from the economies of scale that come with buying in bulk.
The economic survey also found that the majority of households in Nairobi fall into the lower-income bracket, indicating that the issue of rising inflation and a greater poverty tax is a systematic and pervasive problem.
The government can implement programs like subsidizing necessities, establishing social safety nets, and opening up employment possibilities that can result in higher salaries to help low-income workers deal with the effects of rising inflation.
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