Nigeria's cost-of-living crisis is significantly impacting household behaviour, with consumers reducing spending on major items. The Central Bank of Nigeria's Household Expectations Survey for September revealed a sharp decline in consumer sentiment, dropping to -18.7 points from -9.9 in August. This pessimism is widespread, affecting various aspects of household spending. The survey indicates that consumers are becoming increasingly cautious about making significant purchases.
The survey showed that sentiment on house purchases fell to -68.2 points, while car purchases dropped to -67.3 points. Investment intentions also decreased to -50.7 points, and appliances and durables to -49.5 points. Rent expectations were less affected but still negative at -32 points. These declines suggest that Nigerians are postponing or abandoning plans to buy homes, cars, and other major items due to economic uncertainty.
The Central Bank of Nigeria noted that buying conditions for major purchases remained below the 50-point threshold. The willingness to buy buildings and landed property, motor vehicles, and durables stood at 14.8, 15.7, and 19.4 points, respectively. These low figures indicate a significant decrease in consumer willingness to spend on major items. The overall economic sentiment is reflected in the family financial situation index, which fell to -23.9 points.
The cost-of-living crisis is particularly affecting low-income earners. In August, 68.4 per cent of households earning below N70,000 perceived inflation as high, and this figure rose to 77.2 per cent in September. This increasing perception of high inflation is likely contributing to reduced consumer spending. Food remains the dominant expenditure priority for most households, followed by transportation, household goods, education, electricity, and water.
Consumer sentiment on average prices rose to 33.5 points from 23 in August, indicating growing concerns about inflation. The survey also found that consumer sentiment remains negative for the next month (-8.7 points) and three months (-0.4 points). However, sentiment turns positive at 7.1 points over the six-month horizon, suggesting that households expect a gradual improvement in economic conditions.
The Central Bank of Nigeria's survey provides valuable insights into household behaviour and economic sentiment. The significant decline in consumer spending on major items is likely to have broader implications for the economy. The ongoing cost-of-living crisis is affecting various aspects of household spending, from food and transportation to housing and investments.
The Nigerian government and economic analysts will be closely monitoring these trends to understand the full impact of the cost-of-living crisis. The survey's findings highlight the need for policies that address inflation and economic uncertainty. By understanding these shifts in household behaviour, policymakers can develop targeted strategies to support low-income earners and stimulate economic growth.
Key points
- Consumer sentiment in Nigeria has dropped significantly due to the cost-of-living crisis.
- Low-income earners are particularly affected by the crisis, with 77.2 per cent perceiving inflation as high in September.
- Despite current negative sentiment, households expect a gradual improvement in economic conditions over the six-month horizon.
