Nigerians expect lower inflation but hold back on big-ticket purchases

The Consumer Expectations Survey by the Central Bank of Nigeria (CBN) reveals an optimistic outlook among Nigerian consumers on inflation levels over the next six months, suggesting they anticipate a continued decrease in general price levels.

This view reflects a gradual improvement in public perception regarding inflation trends, indicating growing confidence in price stability within the economy.

Despite these positive sentiments, a significant portion of consumers expect that certain essential costs—such as transportation, housing purchases, vehicle acquisition, rent, and medical expenses—will likely rise in the coming months. In light of these anticipated increases, Nigerian households are prioritising spending on essential items, including food, household goods, education, transportation, electricity, and healthcare across both short- and long-term planning periods.

Conversely, consumers show little intention of allocating substantial income toward high-cost purchases, such as new homes or vehicles, within the current assessment period. This reluctance to invest in high-value assets is underscored by the survey’s Buying Condition Index, which reflects consumers’ perceptions on whether it is a favourable time to make such purchases.

The index indicates that most respondents view the current month as an unfavourable time to buy consumer durables, motor vehicles, or real estate. Furthermore, consumers express similar reservations regarding the suitability of the next three to six months for making these significant purchases.

The Buying Condition Index is a tool used to gauge consumer sentiment on high-cost purchases. An index value above 50 signifies that more respondents consider it a good time to buy assets, while a score below 50 indicates the opposite. The current readings, which fall below 50, suggest that consumers are largely hesitant about investing in big-ticket items in the short to medium term.

The survey also incorporates the Inflation Attitudes Survey (IAS), which explores public opinions on interest rates and a general understanding of Nigeria’s monetary policy framework.

Responses gathered from the IAS provide insights into how the public perceives inflation control and interest rate policies—key elements of monetary policy that directly impact the purchasing power of Nigerian consumers. This understanding helps the CBN evaluate the effectiveness of its efforts to maintain economic stability.

An essential part of the Consumer Expectations Survey is the Consumer Confidence Index (CCI), calculated from three sub-indices: Economic Condition, Family Financial Situation, and Family Income.

The Economic Condition index reflects respondents’ views on the overall economic landscape of the country, while the Family Financial Situation index assesses personal finances, including savings, investments, and debt levels. The Family Income Index accounts for the collective income of households, encompassing wages, transfers, pensions, grants, and other forms of earnings.

The CBN uses the survey’s findings to gauge public confidence and understanding, aiding its approach to monetary policy and helping refine efforts to achieve price stability in the Nigerian economy. As consumer expectations continue to evolve, insights from these surveys will play a crucial role in shaping the policies that affect the economic well-being of Nigerian households.