- The Household Expectation Survey, published on the CBN's website, indicates that Nigerians are planning to allocate 54.9 per cent of their income to food items in the coming six months
- With an index of -66.4 per cent. Conversely, those earning above ₦200,000 displayed relatively less pessimism, with a -58.3 per cent index
- Factors driving the current inflationary trends include rising energy costs, a high exchange rate, and transportation expenses
According to a recent survey by the Central Bank of Nigeria (CBN), the escalating inflation rate in Nigeria is expected to lead households to dedicate the largest portion of their earnings to food expenses over the next six months.
The survey, conducted from July 22 to 26, 2024, reveals that the inflation rate has surged to 33.40 per cent, with food inflation exceeding 40 per cent. The data, which was derived from a sample of 1,665 households across the 36 states and the Federal Capital Territory, shows a significant shift in consumer spending patterns due to the economic pressures.
The Household Expectation Survey, published on the CBN's website, indicates that Nigerians plan to allocate 54.9 percent of their income to food items in the coming six months. This is a substantial increase compared to other expenditure categories.
The survey highlights that while households are cutting back on non-essential items, they still foresee significant expenditures on education (35.4 per cent), transportation (30.2 per cent), electricity (20.0 per cent), and medical expenses (12.2 per cent).
Conversely, spending on large-ticket items such as homes, cars, and major appliances, as well as investments in real estate or other ventures, is expected to be minimal. The survey suggests that many Nigerians are drawing down their savings or incurring debt to manage their current financial situation.
The survey also notes that 83.7 per cent of respondents view the current inflation level as excessively high, with businesses showing slightly less pessimism than households. Large businesses reported an index of -70.8 per cent, reflecting significant concern about inflationary pressures, while the general household index was slightly more negative at -63.3 per cent.
Income group analysis revealed that those earning between ₦150,001 and ₦200,000 perceive inflation as particularly severe, with an index of -66.4 per cent. Conversely, those earning above ₦200,000 displayed relatively less pessimism, with an index of -58.3 per cent.
In terms of currency outlook, the CBN survey indicates that while households expect the naira to depreciate further in the short term, there is cautious optimism about a potential rebound by January 2025. The naira, which recently fell to ₦1,598 per US dollar and then to ₦1,639 due to a shortage of foreign exchange, is anticipated to strengthen if the CBN's monetary policies take effect positively.
The survey also projects continued increases in inflation, borrowing rates, and unemployment due to prevailing macroeconomic challenges. A significant 80.9 per cent of respondents believe the economy will weaken further if price pressures persist, while only 3.2 per cent are optimistic about an economic improvement.
Rising energy costs, a high exchange rate, and transportation expenses are factors driving the current inflationary trends. Energy costs rose from 90.6 points in June to 91.8 per cent in July, while the exchange rate and transportation costs also contributed to the inflationary pressure during the review period.
As Nigerian households brace for continued economic difficulties, the survey highlights the pressing need for effective policy responses to address the growing financial strains faced by many citizens.
Rising food prices push headline inflation rate to 34.19%, food inflation to 40.87% in June
Meanwhile, TheRadar reported that the data released by the National Bureau of State Statistics (NBS) on Monday, July 15, the June rate is 0.24 percentage points higher than the 33.95 per cent recorded in May 2024.
On a year-on-year basis, the June inflation rate is 11.40 per cent points higher than the rate recorded in June 2023, which was 22.79 per cent.
