A recent poll conducted by the Central Bank of Nigeria (CBN), reveals that Nigerian households will be forced to spend the majority of their income on food over the next six months due to the country’s growing inflation rate.
This is because food inflation is over 40% and the overall inflation rate is 33.40 percent according to the National Bureau of Statistics’ (NBS) most recent data.
The survey, which had a 99.7% response rate, was carried out from July 22 to July 26, 2024, according to the CBN report. The NBS master sample list, which included 1,665 homes across the 36 federation states and the Federal Capital Territory, was used to determine the sample size.
According to the Household Expectations Survey data the CBN made available on its website, many Nigerians plan to reduce their consumption of non-essential commodities over the course of the next three to six months.
However, throughout the next six months, they want to spend 54.9% of their income on food.
The polls end result shows: “Spending outlook for the next six months showed that consumers plan to spend a substantial amount of their income on the following items: food and other household Items (54.9 points), education (35.4 points), transportation (30.2 points), electricity (20.0 points) and medical expenses (12.2 points).”
Conversely, the respondents do not intend to spend a significant portion of their salary on expensive things like a house, a car, or appliances for the home.
Furthermore, Nigerians have no intention of spending money on investments, such as buying real estate or other types of investments. They also have no intention of conserving their earnings.
The survey went on to reveal: “This reflects their family financial situation in the current month and reaffirms their stance that they will be drawing down on their savings or getting into debt.”
Inflation Perception And Outlook
With an index of -61.1 percent, the overall perception of inflation in July 2024 revealed that 83.7% of respondents thought the present rate of inflation was high. After the replies were broken down, it was found that businesses had a somewhat lower index (-58.7 points) than households (-63.3 percent).
Given that businesses perceive the current month’s inflation rate to be somewhat better than that of households, it seems that they had fewer negative outlooks.
Furthering, the analysis reveals that big enterprises, with an index of -70.8 percent, thought the rate of inflation at the moment was excessive.
An additional analysis of respondents’ income groups showed that, with an index of -66.4 percent, those in the ₦150,001–₦200,000 income group thought that the rate of inflation in the current month was too high.
The income group above ₦200,000, with an index percentage of -58.3%, had the least negative index and the least pessimistic expectations for inflation during the current time.
Consumers Expect Naira To Appreciate By January
According to the CBN study available to BrandSpur business and economy news desk, a lot of Nigerian households anticipate that the naira will weaken over the next three months before strengthening over the next six.
The local currency ended August lower, falling to ₦1,598 per US dollar on Friday. This is even as the lack of the US dollar caused it to drop even further to ₦1,639 per USD.
This comes as the naira, which was the second weakest currency in the world after the Lebanon pound, started to decline after seeing some advances at the start of the second quarter of this year. However, the respondents hold out hope that the battered naira will recover by the start of 2025 as a result of the CBN’s monetary policy actions.
Families Expect Increased Inflation During The Next Six Months
The survey also reveals that Nigerians anticipate continued increases in unemployment, borrowing rates, and inflation as a result of the severe macroeconomic conditions. If prices were to grow more quickly than they currently do, the respondents thought that the economy would ultimately become weaker rather than stronger.
Following the survey further: “The survey result showed that 80.9 per cent of the respondents believed that the economy would end up weaker, while 3.2 per cent opined that it would be stronger.”
Some of the key factors that influenced how businesses saw inflation were as follows:
- The largest driver was a rise in energy costs, which went from 90.6 points in June to 91.8 percent in July.
- The exchange rate increased marginally from 88.3 in June to 88.8 in July, although it stayed high throughout.
With 88.5 percent, transport ranks third among the factors causing inflation throughout the review period.
