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Inflation, new year concerns drive consumer apathy

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Central Bank of Nigeria

Though consumers express some form of cautious optimism about 2021, they remain pessimistic for the remaining part of the year while exercising restraint on spending till inflation eases.

According to the latest Consumer Expectations Survey Report of the Central Bank of Nigeria (CBN), consumers’ overall buying condition index for big-ticket items in the current quarter stood at 21.6 points, indicating that the majority of consumers believed that it was not the ideal time to purchase big-ticket items like consumer durables, motor vehicles, and house among others.

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Indeed, the overall buying intention index in the next twelve months stood at 29.9 index points, indicating that most consumers do not intend to buy big-ticket items in the next 12 months.

Local manufacturers had earlier raised concerns about dwindling household incomes with a notable impact on local patronage and inventory in the productive sector.

The buying intention indices for consumer durables, motor vehicles, and houses and lots were below 50 points, indicating that respondents have no plans to make these purchases in the next twelve months.

The major drivers of the expected upward movement in prices are increased savings, food and other household needs, education, purchase of appliances/ durables, purchase of car/motor vehicle, and purchase of houses.

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In terms of the outlook, consumers’ overall confidence outlook was pessimistic in Q4 2020 standing at -14.8 index points.

Respondents attributed this unfavourable outlook to declining economic conditions, family financial situation, and declining family income.

The consumers were however optimistic in their outlook for the next quarter and next 12 months with indices of 10.5 and 28.9 points, respectively.

The positive outlook, according to the CBN, could be attributed to the expected increase in net household income, anticipated improvement in Nigeria’s economic conditions, and expectations to save a bit and/or have plenty of savings in the next quarter and the next 12 months.

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The Q4 2020 Consumer Expectations Survey (CES) was conducted during November 16 -25, 2020 covering a sample size of 2,070 households drawn from 207 Enumeration Areas (EAs) across the country, with a response rate of 99.8 per cent.

The apex bank explained that the overall consumer confidence index is computed as the average of the three indices, namely: economic condition, family financial situation, and family income.

Similarly, most respondents expected the naira to appreciate, the inflation rate to rise in the next 12 months.

In terms of joblessness, the unemployment index for the next 12 months remains positive at 36.9 points in Q4 2020, indicating that consumers generally expect the unemployment rate to rise in the next year.

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