Nigerians are spending more money, but their money is worth less because by 2023, inflation will have cost consumers at least N7.61 trillion.
The National Bureau of Statistics (NBS) has released new data showing that households’ final consumption spending increased to N141.69 trillion (purchasers’ value) in 2023, a 30.63 percent rise from N108.47 trillion in 2021. But this growth was merely nominal.
The NBS statistics, headed “Nigerian Gross Domestic Product Report (Expenditure and Income Approach) Q3, Q4 2023,” indicate that this was different in actual terms.
Nigerians spent N52.45 trillion on household consumption in 2021, to put it in actual currency. But in 2023, this dropped to N44.84 trillion, a real decrease of N7.61 trillion.
An item’s actual worth in economics is its nominal value less inflation, according to the online business lexicon Investopedia.
Household spending is defined by the Organization for Economic Co-operation and Development as the total amount of money spent by a household on final goods and services to meet their basic needs, which include clothing, food, housing (rent), energy, transportation, durable goods, medical expenses, entertainment, and other services.
The NBS attributed the 2022 fall in consumption expenditures to difficult economic conditions and price increases.
One of Nigeria’s main concerns has been inflation. In Nigeria, it was 28.92 percent in December 2023 compared to 15.63 percent in the same month the previous year. Since then, it has increased dramatically in the most populous country in Africa, reaching 33.95 percent in May 2024.
The current rate of 40.66 percent for food costs has put further strain on Nigerians’ finances.
The world’s highest food expenditure rate, reported by Nigerian households in 2023, was 59 percent, according to data from the worldwide e-commerce company Picodi.
The Global Alliance for Improved Nutrition and the NBS released a report titled “Cost of Healthy Diet,” which states that the cost of a nutritious diet increased by 110.7 percent to N1,035 per day in April 2024 from N491 per day in the same month previous year.
According to the World Bank’s most recent “Nigeria Development Update” report, the number of impoverished Nigerians climbed from 89.8 million to 104 million in 2023 as a result of the country’s high inflation.
In Nigeria, some variables contribute to inflation, such as depreciating naira, surplus liquidity, and insecurity.
Nigerians are changing their lifestyles and spending less on luxury items. Some of these changes include buying fewer clothes, dining out, getting coffee or drinks on the go, grocery shopping, and reducing the number of subscriptions and memberships.
The CBN has been raising its monetary policy rate, which has been at 26.25 percent since May 2024 from 24.75 percent in March, in order to counteract skyrocketing headline inflation.
In contrast, the World Bank stated in its “Global Economic Prospects” report that it is not a solution to Nigeria’s present raging inflation.
The research stated that “it is possible that the tightening of monetary policy stops short of reining in inflation.”
