For the past five years, it has been extremely difficult for consumers as prices of household items continue to climb rapidly without any end in sight, making the outlook for the second quarter of the year bleaker, analysts say.
This may likely be a setback for the economy that is already recovering from the adverse impact of the lockdown measures used to curb the spread of the COVID-19 pandemic.
“For consumers, the first half was shaped by higher prices evidenced by the sustained upward movement of headline inflation,” Damilola Adewale, a Lagos-based economic analyst said.
Adewale said that we saw notable increases in food prices, energy costs, utilities, transport and logistics. “In essence, the first half was not favourable to them.”
He predicts that if the inflationary drivers remain unaddressed, the trend will persist into the second half of the year.
Similarly, Ayodeji Ebo, the managing director and chief business officer at Optimus by Afrinvest Limited noted that it’s really a challenging time for consumers as income is not rising.
“Prices of major commodities which have increased significantly have made people either reduce the quantity of what they usually buy or they look for substitutes with cheaper prices,” Ebo said.
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The Ukraine-Russia war has led to a devastating impact on Africa’s biggest economy. The headline inflation rate for May 2022 rose to the highest in 11 months and also the fourth consecutive increase since January this year.
Data from the National Bureau of Statistics (NBS) show that on a month-on-month basis, it increased by 1.78 percentage points to 17.71 percent from 16.82 percent in April.
Additionally, food inflation, which comprises more than 50 percent of the inflation rate, also rose to 19.50 percent, the highest in eight months when compared to 18.37 percent in the previous month.
Food is now costly to prepare. I used to budget a specific amount for feeding but I don’t do that anymore because you can’t determine what the market brings next, says Emmanuel Chigozie, a 22-year-old undergraduate at the Federal University of Technology, Owerri.
“Now, I just buy a bag of rice and other items in large quantities and support them with noodles. I eat more noodles in midweek and prepare rice on weekends which I handle with care,” Chigozie explained.
For Arinola Okeowo, the chief executive officer at Ultra Farms, the rising prices has affected the sales of her products.
“There has been a 300 percent increase in the cost of fertilizers, especially due to the war. Also, there has been a hike in the price of farm inputs like seeds stemming from the weak strength the Naira wields against the Dollar in the exchange market,” Okeowo complained.
A recent report by the World Bank titled “The Continuing Urgency of Business Unusual,” stated that inflation in Nigeria, already one of the highest in the world before the war in Ukraine, is likely to increase further as a result of the rise in global fuel and food prices caused by the war.
The International Organisation estimates that inflation is likely to push an additional one million Nigerians into poverty by the end of 2022, on top of the six million Nigerians that were already predicted to fall into poverty this year.
The average consumer is really stretched right now in terms of purchasing power and I don’t see it getting better, Uchenna Uzo, a consumer expert and faculty director at the Lagos Business School.
Uzo added that people will become more cautious and save less now. “So, there will be more discretionary spending as opposed to purchasing lifestyle products and services.”
