Recent data mined from Nigeria’s Gross Domestic Product (GDP) reports of 2023 up to the second quarter of 2024 show that household consumption has consistently dwindled over the period.

According to the report, in the first quarter of 2023, household consumption was -23.57 per cent. It increased to 7.08 per cent in the second quarter, fell to -10.12 per cent in the third quarter, and dropped further to -13.68 per cent in the fourth quarter.

The report shows that the annual average for 2023 was -10.89 per cent.

The situation became even more alarming in 2024 as the first-quarter report showed household consumption fell to -42.28 per cent and slumped to -61.18 per cent in the second quarter.

Paradoxically, during the same period, disposable income maintained a near-steady rise, from 9.17 per cent in the first quarter of 2023 down to 8.45 per cent in the second quarter, up to 8.91 per cent in the third quarter, and 9.32 per cent in the fourth quarter, with an annual average of 8.98 per cent for 2023.

In the first quarter of 2024, disposable income rose to 12.91 per cent and increased further to 17.44 per cent in the second quarter.

A fall in household consumption means that people are spending less money on goods and services, indicating a decrease in overall consumer spending within an economy. This can be a sign of a potential economic slowdown, as it directly impacts aggregate demand and business activity.

In a normal situation, a rise in disposable income would ordinarily drive up household consumption. However, that has not been the case in Nigeria, as inflation has ravaged the country and drained people’s purchasing power.

The President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, recently raised the alarm that the inventory of unsold products in the manufacturing sector rose to N1.4 trillion in the second half of 2024 from N1.24 trillion in the first half of 2024. This is a consequence of consumers’ inability to buy goods due to high costs.

Many businesses have either scaled down their operations or shut down completely, while others have relocated to other countries.

A recent report by Mustard Insights, a Nigerian data company, revealed that 43.7 per cent of business owners in Nigeria reduced their workforce in 2024, indicating widespread struggles and potential closures across various sectors.

Experts believe that when households consume less, it often reflects a reduced standard of living, as citizens may be cutting back on essential goods and services. This can lead to increased hardship, especially for lower-income families. They warn that the quality of life may deteriorate as access to necessities becomes limited.

“This goes to show how unhealthy many Nigerians have become at this moment. If household consumption has fallen this drastically, it means many people are not even eating balanced diets anymore—let alone taking supplements or medications,” they said.

Earlier this year, a report by PiggyVest, an online savings platform, showed that 83 per cent of Nigerian households are prioritizing food over education, healthcare, and even savings and investments.

The report stated that this was because the funds available to families could barely provide them with a quality meal.

Last year, the Central Bank of Nigeria (CBN) released a report stating that households were spending 55 per cent of their income on food.

The CBN, in the report titled ‘Household Expectation Survey’ published on its website, noted that many Nigerians intended to cut down on non-essential items and planned to spend 54.9 per cent of their income on food items, 35.4 per cent on education, and 12.2 per cent on medical expenses.

The CBN report also showed that Nigerians do not intend to spend on investments such as acquiring landed property or other forms of investment. They equally do not plan on saving their income.

The removal of fuel subsidies by the present administration to shore up government revenue exposed the people to a cost-of-living crisis due to heightened inflation, which has rendered cash in their hands almost worthless.

The government is making more money, and the people are also erroneously believed to be getting more money, but the money is worthless in their hands.

The Governor of Bauchi State, Senator Bala Mohammed, at the launch of the Nigeria Development Update (NDU) by the World Bank last year, acknowledged that while states were receiving more funds, the money could barely meet their budgets because prices had skyrocketed.

People can hardly afford one square meal a day as food prices keep rising, exacerbating the hunger crisis in the country.

A report by Cadre Harmonisé, led by the Federal Government and supported by partners including the United Nations World Food Programme, warned of deteriorating food security in Nigeria, with 33.1 million people projected to face high levels of food insecurity during the next lean season (June- August 2025). This is due to the inability of many families to afford staple foods.

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A high household consumption rate is important for a nation as it supports businesses and enables individuals to maintain or improve their living standards.

“A stable and healthy economy typically sees positive growth rates in consumption, usually in the range of 2-4 per cent annually,” said Professor Godwin Oyedokun, a professor of Accounting and Financial Development at Lead City University, Ibadan.

He noted that a consumption growth rate within this range would indicate that consumers are confident in their economic situation and that the economy is on a path to recovery or growth.

“The current trends suggest significant economic challenges that need to be addressed through policy interventions, economic stimulus, or social support programs to improve consumer confidence and spending,” he said.

He also suggested that the Central Bank of Nigeria (CBN) could lower interest rates to encourage borrowing and spending.