Nigerians have expressed their belief that inflation and unemployment rates would rise in the next one year. This was contained in the Central Bank of Nigeria (CBN) Consumer Expectations Survey (CES) report for the third quarter of 2018.
The survey was conducted a few weeks ago from a sample size of 1,770 Households randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 96.9 per cent.
The survey also shows that Nigerians expect the Naira exchange rate value to appreciate in the next 12 months. Majority of Nigerian consumers also projected a fall in the borrowing rate in the next one year.
Nigerian Consumers’ Confidence Returns
According to the CBN report, the Consumer Overall Confidence rose to 1.5 Index points, showing that consumers’ overall confidence in the Nigerian economy bounced back in the third quarter of 2018 as more consumers were optimistic in their outlook, unlike the previous quarter of Q2 2018 (when the index stood at -6.3 points).
The 1.5 index points show a growth of 12.0 basis points from the -10.5 index points recorded in the third quarter of 2017
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Also, the consumer outlook for the fourth quarter of 2018 and the next 12 months was positive standing at 24.7 points and 30.1 points respectively. This new confidence in the economy may be linked to their expected rise in net household income, expected improvement in the nation’s economic atmosphere and expectations in their savings over the next one year.
High Inflation Forecast
Nigerian consumers are expecting a further rise in the prices of goods and services in the next one year with the index points for the outlook on Price Changes in the next 12 months standing at 16.7%. Transportation, education, medical care, electricity, house rent and telecommunication are the main drivers of the outlook.
After eighteenth consecutive months of disinflation (since January 2017), head on inflation increased by 11.23% year-on-year in August 2018; which is 0.09% higher than the recorded rate in July 2018 (11.14%). The rise in inflation continued in September when it increased by 11.28% year-on-year, which is 0.05% higher than the recorded rate in August 2018 (11.23%).
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Consumers to spend less on luxury
Majority of Nigerian consumers nationwide are of the opinion that the next 12 months would not be an ideal time for the purchase of big-ticket items like motor vehicles, house, etc.
The Consumers’ Overall Buying Conditions index in the third quarter of 2018 was 35.1 points while the index for Overall Buying Intention in the next one year stands at 46.6 index points. Respondents have no plan of buying motor vehicles and house with the buying intention indices for the items below 50 points.
Meanwhile, the index for consumer durables stood above 50 points which shows that respondents have intentions of purchasing gas cooker, furniture, and electronics in the next 12 months.
Appreciation in Naira Value
With the Exchange Rate Outlook of 16.4, most Nigerian consumers surveyed believed that the exchange rate value of the Naira will rise in the next 12 months while a majority of the respondents equally expect the rate of borrowing to drop in the next one year, with the Borrowing Outlook standing at -2.6%. The exchange rate of the nation’s currency presently is at US$1 to ₦361.
Also, Nigerian consumers are expecting the unemployment rate to rise in the next one year with the Unemployment Outlook index still positive with 25.0 points in the third quarter of 2018. The last unemployment rate released by the National Bureau of Statistics (NBS) shows the indicator standing at 22.8% in the third quarter of 2017.