The NOIPolls Consumer Confidence Index (CCI) report released for Q1, 2018 has revealed that the CCI declined from 70.5-points in Q4, 2017 to 65.6 points signifying a 4.9-points decrease. This decrease indicates that confidence among Nigerian households to spend declined in Q1, 2018. The NOIPolls Consumer Confidence Index mirrors consumers’ attitudes on the present and future economic prospects forecasting business conditions and likely developments for the months ahead. Since the strength of a nation’s economy is demonstrated by the willingness of its consumers to either spend or incur debt, the decrease experienced from the results obtained in Q1, 2018 may have a direct impact on the flow of business activities in the country.
The two variables that make up the CCI; the Present Situation Index (PSI) and the Expectation Index (EI) both experienced a decline. The PSI experienced an 11.6-points decline from the results of Q4, 2017 (50.6-points) to stand at 39-points in Q1, 2018. Similarly, the EI declined by 5.6-points to stand at 79.9-points. These are the key highlights from the Q1, 2018 Portfolio of Indices Press Release.
In February 2014, NOIPolls Limited introduced its portfolio of indices; the NOIPolls Personal Well-Being Index (PWBI), the NOIPolls Consumer Confidence Index (CCI) and the NOIPolls Eagle 30 Business Confidence Index (EBCI). The NOIPolls Personal Well-Being Index measures factors impacting on the lives of everyday Nigerians; thereby producing a complete view of the individual’s personal well-being. The NOIPolls Consumer Confidence Index provides consumer assessments of the economic situation and their intentions and expectations for the future. The NOIPolls Eagle 30 Business Confidence Index measures business leaders’ perceptions and expectations about the Nigerian business environment using the top 30 companies in the country.
Nigerian businesses, financial and government agencies largely depend on their perceptions and micro assessment of consumers’ expectation in making decisions. At best, they draw a conclusion on the business environment based on information from their immediate surroundings while the minorities conduct surveys that are time and money consuming. However, the introduction of these indices provides indicators that will ensure stakeholders can detect and respond to changes in consumer behavior, the economy, and the business environment in Nigeria.
This report presents the Q1, 2018 results for the NOIPolls Consumer Confidence Index (CCI).
THE NOIPOLLS CONSUMER CONFIDENCE INDEX (CCI)
The NOIPolls Consumer Confidence Index (CCI) in Q1, 2018 experienced a decline of 4.9-points to stand at 65.6-points. This may indicate a dip in the purchasing confidence of citizens which is capable of hindering economic activities in the country.
There are two variables that make up the NOIPolls Consumer Confidence Index; the Present Situation Index (PSI) and the Expectation Index (EI). The Present Situation Index (PSI) measures the current perception of consumers regarding their previous months’ purchasing power. Although the PSI experienced a decline of (11.6-points) from the results, the index remains firmly above average. Also, the Expectation Index, which measures consumers’ perception of their future (3 months), declined by 5.6-points to stand at 79.9-points. The figure below shows the year on year Q1 results and Q1, 2018 recorded a better PSI and overall CCI compared to other years in view; whereas, Q1, 2017 had the highest points on expectation indices.
The PSI and EI comprise of 7 variables and five out of the 7 variables experienced a decline. The current prices of goods and services and the economic indices accounted for the highest decrease of 16.5points and 10.4-points respectively. These are highlighted below;
Current Economic Situation Index – 39.2
The Current Economic Situation Index is the second highest decline. It decreased by 10.4-points to stand at 39.2-points compared to the result obtained in Q4, 2017.
Expectation of the Country’s Economic Situation Index –93.9
This index declined by 1.6-points to stand at 93.9 in Q1 2018, signifying that consumers are hopeful about the country’s economic situation.
Current Employment Condition Index – 53.7
The Current Employment Situation index declined by 0.9-point to stand at 53.7 in Q1, 2018.
Expected Employment Condition Index – 98.0
This Index increased by 0.8-point to stand at 98.-points in Q1, 2018.
Current Prices of Goods and Services Index – 24.0
The Current Prices of Goods and Services Index experienced the highest decline of 16.5-points in Q1, 2018.
Expectation of Prices of Goods and Services Index – 81.3
The Expectation of Prices of Goods and Services Index declined by 1.4-points to stand at 81.3-points in Q1, 2018 signifying that consumers are anticipating a future reduction in the prices of goods and services.
Expected Total Family Income Index – 69.2
The Expected Total Family Income Index increased by 4.3-points to stand at 69.2-points in Q1, 2018.
Trend analysis revealed that the CCI, PSI, and the EI all declined from results obtained in Q4, 2017.
Monthly trend analysis showed that the CCI experienced a steady decline since February 2018.
In conclusion, the NOIPolls Consumer Confidence Index declined by 4.9-points in Q1, 2018 to stand at 65.6 from the 70.5 point obtained in Q4, 2017. The CCI is a vital tool which helps in predicting consumer spending patterns as they may affect the overall economic activities of Nigeria. Therefore, when consumers are confident of their futures, their propensity to spend increases which in turn drives higher economic growth, however, if consumers are not confident, as revealed by this data, they tend to save rather than spend and perhaps constrain economic growth. The decline in the CCI of Q1, 2018 could be mainly driven by a rising pessimism amongst Nigerian households in regard to their views on current economic conditions. This result shows that consumer expectations concerning future economic developments have declined modestly.