A recent survey by the Central Bank of Nigeria (CBN) has highlighted the impact of rising inflation on Nigerian households, with findings indicating that families will allocate the majority of their earnings to food over the next six months.
The survey, conducted between July 22 and 26, 2024, comes amid a backdrop of escalating inflation rates, with the National Bureau of Statistics (NBS) reporting an overall inflation rate of 33.40% and food inflation surpassing 40%.
According to the CBN’s ‘Household Expectation Survey’, the poll covered a sample size of 1,665 households across the 36 states of the federation and the Federal Capital Territory, achieving a response rate of 99.7%.
The survey reveals that in the face of economic pressures, many Nigerians plan to cut back on non-essential items in the coming months. However, 54.9% of their income is expected to be spent on food.
“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),” the survey disclosed.
Conversely, the respondents indicated little intention to invest in big-ticket items such as purchasing houses, cars, or household appliances. Investment in properties or savings is also not prioritized, reflecting a strain on family finances.
“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,” the survey noted.
Inflation Perception and Outlook
The survey also sheds light on the perception of inflation among Nigerian households.
In July 2024, 83.7% of respondents believed that the current level of inflation was high, with an index of -61.1%. Businesses were slightly less pessimistic, with an index of -58.7 points, compared to households at -63.3%.
Large businesses expressed particular concern, with an index of -70.8%, while those earning above ₦200,000 per month showed the least pessimism, with an index of -58.3%.
Naira Depreciation and Economic Expectations
The survey also revealed that many households expect the naira to continue its downward trend over the next three months, but are optimistic about a potential recovery in six months. The naira has recently plunged to ₦1,598 per US dollar, making it one of the world’s worst-performing currencies.
Despite the current challenges, respondents are hopeful that the CBN’s monetary policies will help stabilize the naira in the early part of 2025.
However, the outlook on inflation and the broader economy remains bleak. The majority of respondents (80.9%) believe that the economy will weaken further if inflation continues to rise. Energy costs, the high exchange rate, and transportation expenses were identified as key drivers of inflation, with energy costs increasing from 90.6 points in June to 91.8% in July.
As Nigerians brace for continued economic challenges, the CBN’s survey underscores the pressing need for measures to alleviate inflationary pressures and support household incomes.