Abuja, Nigeria—The Central Bank of Nigeria (CBN) has issued a stark warning of impending financial strain for Nigerians, as a new report reveals that more citizens may need to rely on borrowing to meet increasing expenses over the next six months. The findings, detailed in the July 2024 Inflation Expectations Survey Report published on the CBN’s official website on Tuesday, paint a concerning picture of the nation’s economic outlook.
According to the report, household expenditures are expected to continue rising through the remainder of 2024 and into January 2025, placing a significant burden on Nigerian families. The survey, which was conducted from July 14th to 26th and involved 1,600 businesses and 1,650 households across all 36 states and the Federal Capital Territory, aimed to gauge perceptions of current and future inflation trends and identify the primary drivers behind these trends.
The CBN’s survey revealed that 83.7% of respondents view the current level of inflation as high, with an overall perception index of -61.1 points. A detailed breakdown shows that businesses, with an index of -58.7 points, are slightly less pessimistic about inflation compared to households, which have an index of -63.3 points. Large businesses, in particular, expressed significant concern, with an index of -70.8 points, indicating a strong belief that the current inflation level is excessively high.
The report highlighted that all income groups are experiencing worsening financial situations, with many Nigerians expected to either deplete their savings or incur debt in the coming months to meet financial obligations. The CBN assessed consumer perspectives across three key dimensions: economic conditions, family financial situations, and family income. This comprehensive approach aims to capture a broader view of how inflation impacts individuals and families, providing valuable insights for managing monetary policy and addressing economic challenges.
Consumer confidence was reported as broadly pessimistic for the three months ending in October and November 2024. This pessimism is expected to persist, with confidence indices of -21.8 and -9.1 points, respectively, as consumers brace for worsening economic conditions and declining family financial situations. The report indicates that many consumers are concerned about having to rely on savings or accumulating debt to meet their financial needs.
Looking ahead, Nigerian consumers anticipate a rise in inflation across all reviewed periods. The report highlights inflation indices of -62.2 for the current month, -53.7 for the next month, -41.7 for the next three months, and -29.0 for the next six months. Anticipated price hikes are particularly significant in categories such as transportation (68.9 points), medical expenses (67.7 points), purchases of cars or motor vehicles (67.1 points), house purchases (66.8 points), and rents (63.4 points).
Both businesses and households identified changes in energy prices, exchange rates, and transportation costs as the primary drivers of inflation in July 2024. As expenditures are expected to continue rising throughout the year, the report emphasizes the urgent need for the CBN to consider lowering interest rates to help alleviate the mounting financial pressures on Nigerian households.
The CBN’s report serves as a critical indicator of the challenges ahead for Nigerian families and businesses, as they navigate an increasingly difficult economic environment.