Households shy away from big-ticket purchases as cost-of-living crisis bite

Nigerian households are increasingly putting off purchases of houses, cars and other high-value assets as persistent inflation continues to erode purchasing power, despite signs that consumer confidence is gradually improving.

The latest June 2026 Household Expectations Survey by the Central Bank of Nigeria (CBN) shows that consumers remain focused on essential spending while avoiding discretionary and capital-intensive purchases, highlighting the lingering impact of elevated living costs on household finances.

According to the survey, households recorded negative outlook indices for the purchase of houses (-63.8), cars or motor vehicles (-62.9), investments (-43.7), household appliances and consumer durables (-42.9), and rent (-28.1) in the current month, underscoring widespread reluctance to commit income to expensive assets.

The CBN noted that while modest improvements are expected over the next six months, sentiment across these categories remains firmly negative.

The survey also found that the buying conditions for major purchases remain unfavourable. The Buying Conditions Index stood at just 25.3 points for consumer durables, 25.1 points for buildings and landed property, and 24.7 points for motor vehicles in June, well below the neutral 50-point threshold that would indicate favourable buying conditions.

Similarly, purchase intentions remain subdued. Consumers’ willingness to buy high-value assets was weak, with intention indices of 24.1 for consumer durables, 18.9 for motor vehicles, and 18.8 for buildings and landed properties, suggesting most households have postponed major purchases until economic conditions improve.

A consumer market report by Boston Consulting Group’s Africa Consumer Sentiment Survey 2025 disclosed that Nigeria’s consumer economy is under pressure, with 83 percent of households cutting back on discretionary purchases as inflation, weak income growth, and currency instability continue to erode purchasing power.

The pullback places Nigeria among the most financially strained consumer markets in Africa, alongside Kenya and South Africa, and highlights the depth of stress facing households across Sub-Saharan Africa.

Unlike previous years when manufacturers aggressively repriced products to offset higher costs, many companies entered 2026 pursuing affordability strategies aimed at rebuilding volumes and protecting market share.

Inflation keeps households in survival mode

The caution comes even as overall consumer sentiment improved slightly. The Overall Consumer Sentiment Index rose to -14.6 points in June from -16.8 points in May, indicating that while households remain pessimistic, confidence is gradually recovering. Family financial sentiment also improved to -19.6 from -22.7, while perceptions of family income strengthened to -5.6 from -8.3.

Consumers also appeared less concerned about the pace of price increases than in the previous month. The sentiment index for average prices of selected goods eased to 28.9 points in June from 35.2 points in May, reflecting a moderation in inflation expectations even though households still expect prices to remain elevated over the coming months.

According to the National Bureau of Statistics, Nigeria’s headline inflation rate rose to 15.93 percent in May. This is an increase from the 15.69 percent recorded in April.

On the other hand, food inflation also rose, climbing to 16.96 percent.The Consumer Price Index (CPI), which tracks the average change in prices over time, shows a steady upward trend for the year. This means goods and services are getting more expensive.

Essentials dominate household budgets

Rather than making discretionary purchases, households continue to channel most of their income towards meeting basic needs.

Food remained the biggest expenditure priority with an index of 57.9 points, followed by other household goods (29.8 points), electricity and water (19.5 points), education (18.4 points), and transportation (13.1 points). The trend is expected to remain largely unchanged over the next six months.

“Across all periods, respondents consistently prioritised basic expenditures such as food, transportation, other household goods, Electricity & Water, etc. Food consistently accounted for the highest expected spending and is projected to remain the primary focus over the next six months.”

The survey suggests that inflation continues to shape household decision-making. About 66.5 percent of respondents said the Nigerian economy would become weaker if prices rise faster than they currently do, while only 8.5 percent believed the economy would become stronger under such circumstances.

Households also expect borrowing costs to remain elevated. About 42.7 percent of respondents anticipate bank lending rates will increase over the next three months, although 66 percent said they would prefer interest rates to decline to support economic activity. Nearly half of the respondents indicated they would rather see lower interest rates, even if it means tolerating somewhat higher inflation