The rising inflation rate will force Nigerian households to spend the largest amounts of their earnings on food in the next six months, a recent survey by the Central Bank of Nigeria (CBN) has shown.

This is as the most recent report by the National Bureau of Statistics (NBS) puts the inflation rate at 33.40 per cent, and food inflation over 40 per cent.

According to the CBN report, the poll was conducted from July 22 to 26, 2024, with a response rate of 99.7 per cent with its sample size drawn from the NBS master sample list of 1,665 households in the 36 states of the federation and the Federal Capital Territory.

The report, Household Expectation Survey published on its website, CBN said many Nigerians intend to cut down on items that are not essential now, in the next three and six months.

They, however, plan to spend 54.9 per cent of their income on food items in the next six months.

“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 poll shows.

On the flip, the respondents do not plan to spend a substantial amount of income on big-ticket items such as the purchase of a house, car and household appliances.

Also, Nigerians do not intend to spend on investment, such as acquiring landed properties or other forms of investments. They equally do not plan on saving their incomes.

“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 apex bank survey shows.

Inflation Perception And Outlook

In July 2024, 83.7% of respondents perceived inflation as high, with an index of -61.1%.

A closer look at the data reveals that businesses reported a slightly lower negative index of -58.7 points compared to households, which had a negative index of -63.3%.

This suggests that businesses were somewhat less pessimistic about inflation, viewing it as slightly less severe than households did.

Among businesses, large companies reported a more pronounced concern, with an index of -70.8%.

Analysis by income group showed that respondents earning ₦150,001 to ₦200,000 viewed the current inflation level as too high, with an index of -66.4%.

In contrast, those earning above ₦200,000 had a less negative index of -58.3%, indicating a relatively lower level of pessimism about inflation expectations for the current period.

Consumers Expect Naira To Appreciate By January

The CBN survey indicated that many Nigerian households anticipate a continued decline in the naira over the next three months, but expect it to strengthen in the following six months.

On Friday, the naira fell to ₦1,598 per US dollar, closing August on a negative note, and further decreased to ₦1,639 per USD due to a shortage of foreign currency.

Despite some gains at the start of the second quarter of the year, the naira has been on a downward trend, making it one of the world’s weakest currencies after the Lebanese pound.

However, respondents remain hopeful that the CBN’s monetary policies will lead to a recovery for the naira by early 2025.

The survey also reveals that Nigerians expect inflation, borrowing rates, and unemployment to rise due to ongoing macroeconomic pressures.

Respondents are concerned that the economy may weaken if prices increase more rapidly than they currently are.

“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,” the CBN survey revealed.

Factors that played a crucial role in shaping the perception of inflation among businesses include: Energy costs increased from 90.6 points in June to 91.8 per cent in July, making it the top driver.

The exchange rate remained consistently high with a slight increase from 88.3 in June to 88.8 in July. Transportation is the third driver of inflation during the review period with 88.5 per cent.