Consumers’ confidence remains downbeat on deteriorating economy

The deteriorating economic condition is having a toll on Nigerian consumers as overall confidence outlook in third quarter 2016 remained downbeat, as it has been since Q3, 2011, according to the Central Bank of Nigeria (CBN).

 The CBN’s Consumer Expectation Survey report released yesterday shows that at 28.2 index points, consumers’ confidence dipped further by 26.3 points below the level achieved in the corresponding quarter of 2015.

The bleak outlook of consumers in the quarter under review could be attributed to the deteriorating economic condition and decline in net household income, leading to draw-down on household savings or getting into debt.

The consumer outlook for the next quarter and next 12 months is however positive, at 17.8 and 32.1 points, respectively. The positive outlook in the next quarter and the next 12 months could be attributed largely to the anticipated improvement in Nigeria’s economic conditions, expected increase in net household income and expectations to save a bit and/or have plenty over savings.

The report further revealed that at 17.8 and 32.1 index points, the overall consumers’ confidence index in the next quarter and the next 12 months, respectively, were expected to be better than the outlook in the current quarter. In the next quarter and the next twelve months, consumers expect the general economic conditions in the country and the net household income to be much better. Consequently, households expect to save a bit and/or have plenty over savings.

On average, more households nationwide expect some increase in their expenditure on basic commodities and services in the next 12 months. With an average index of 13.7 points, the index dropped by 4.5 points from the 18.2 points recorded in the corresponding quarter of 2015.

The report said majority of consumers nationwide expect to spend substantial amount of their income on food and other household needs, education, savings, medical expenses, purchase of consumer durables and investments in the next 12 months. On the other hand, they do not plan to spend substantial amount of their income on large ticket items such as purchases of house and car/motor vehicle. These results conform with the National Household Expenditure Survey which showed that majority of households spend substantial amount of their income to meet basic needs and have little left for long term investment.

Most consumers nationwide expect the prices of the following expenditure items to rise in the next quarter: house rent, education, transportation, medical care, electricity, food, clothing & footwear and communication. Based on this outlook, they expect the government and/or monetary authority to take appropriate measures to dampen the impact of these inflationary expectations on the economy.

Consumers’ views were captured across three dimensions, namely: – economic conditions, family financial situation and family income. Consumers expressed pessimism in the general economic conditions, family financial situation and family income in the current quarter.

All the income groups opined that economic conditions, family financial situation and family income were getting worse as they anticipated worsening economic conditions, drawing down on their savings or getting into debt and a decline in net household income.