• Tuesday, June 25, 2024
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BusinessDay

How Nigerians are cutting costs this festive season

For millions of households in the country, the festive season has come at a time when the inflationary pressure is intensifying and hitting them hard.

In a country where the minimum wage rate is N30,000 below $300 per month, the ballooning costs of food prices have left many Nigerians making calculated steps this Christmas as high fuel and food prices pressure their budgets.

The inflationary pressure has shrunk the value of consumers’ disposable income, stretched budgets, and forced many to cut down on their purchases for the festive season, with many forgoing long-time traditions, BusinessDay’s findings show.

“During the festive season it is a tradition for us to give out gifts to loved ones and less privilege,” says Adenike Odumosu, a 45-year consultant with an auditing firm on the Island, noting that her family won’t be doing that this year as their savings have dwindled.

“We will not be giving gifts this year to loved ones or taking anything to the orphanage for the children there because we cannot afford it.”

Odumosu is being pinched by inflation. According to her, she will spend an average of about N20,000 on her family’s weekly groceries in 2022 and now spend N50,000 buying weekly groceries in 2023, a 150 percent increase.

Eniola Onaopemipo, a sales representative at a firm in Ikeja, says her family has been cutting down on purchases to survive amid surging prices and would not be giving any gifts to their family pastors and neighbours.

“You cannot go to the market with a budget anymore because food prices keep rising daily,” says Onaopemipo. “Things are hard in the country and there seems to be no respite insight.”

Adejoke Adewunmi, a mother of five who was at Mile 12 Market to make purchases, says she will be buying a single dress for each of her children as a cut-down measure.

“It has been a very difficult year. Prices of everything have doubled and we can no longer afford the menu we usually have for Christmas this year and we won’t be travelling to Ondo to celebrate it,” she says.

“Also, we are cutting down on clothing for Christmas. I usually buy two dresses each for my children but we won’t do that this year,” she adds.

Chioma Nwafor, a secondary school teacher at Ojodu, says she won’t be travelling to Abia to celebrate Christmas with her parents owing to the high cost of transportation.

“I moved to Lagos five years ago and I usually travel for Christmas and New Year each year. But I will not be doing that this year for the first time,” she says.

“This means I will be celebrating the festive season alone and outside my state which is a tradition for me. I am cancelling that tradition this year as I cannot afford to travel,” she states.

Odumosu, Onaopemipo and Nwafor like millions of households are cutting down on purchases and forgoing traditions as food prices continue on a relentless rise.

The situation is shrinking wallets and affecting people’s ability to feed and meet their daily nutritional needs.

The sharp and continuous rise in food prices is owing to a combination of factors – the weakening naira, climate change, recent economic reforms and escalating insecurity that has led to food production shortfall.

The constant surge has accelerated headline inflation to 28.2 percent in November 2023 and food inflation to 32.8 percent, according to the most recent National Bureau of Statistics CPI report.

The World Bank, in its latest Nigeria Development Update report, said sluggish growth and accelerating inflation in Africa’s biggest economy have raised the poverty rate by 46 percent in 2023 from 40 percent in 2018, with the number of poor Nigerians put at 104 million.

The global bank also said the country’s inflation has eroded the N30,000 minimum wage by 55 percent, thus reducing household expenditure.

“We thought this naira scarcity would be a thing of the past, but it is happening again. I don’t know if it is a crime to be a Nigerian. It seems our governments are bent on only increasing the suffering of the masses,” said Ronke Kolawole, a secondary school teacher in Ikeja.

“We just keep cutting down on purchases to survive, especially for Christmas when prices are usually higher owing to a rise in demand,” she noted.

Add to retailers’ gloom

Businesses have been hard hit as households cut down on purchases to survive the current economic hardship. It is adding to the gloom that has descended on businesses as they struggle to cope with high borrowing costs.

“Sales have been very slow unlike last year because there is no money in the economy,” Bimpe Alabi, a frozen food seller, says. “Most of my customers are complaining of no money.”

Inventory of unsold products in the manufacturing sector rose to N272 billion in the first half of 2023 from N187.1 billion in the same period of last year, the Manufacturers Association of Nigeria’s half-year review shows.

MAN attributed the increase in inventory to weakened consumer purchasing power, brought about by diminishing real household income resulting from the ongoing escalation of inflationary pressures and the aftermath of the subsidy removal.

Also, business activity dropped to its lowest in eight months to 48 points, according to the November PMI report by Stanbic IBTC Bank.

Currently, the intensifying naira scarcity is inflicting more pain on Nigerians and leaving them frustrated over their inability to get the cash (naira) requirements they need for daily transactions.

“I bought 120 broilers to sell for the season but I was only to sell only 27 out of the total. I even ended up selling about seven below the initial price I wanted to sell because of low patronage,” says a trader who simply gave his name as Chukwudi.

“In 2022, I bought 200 broilers and I sold them all during Christmas and had to restock for the New Year even when prices were high. But this year, it is worse, people are not buying at all and those buying have reduced the quality they usually buy,” he says.

“It has been tough for us traders as well. The longer the broilers stay with me the more I spend on feeds and we all know how expensive poultry feeds are,” he adds.