Consumers show no plans to buy big-ticket items next 12 months

Dealers in big ticket items such as motor vehicles, house amongst others may be in for tough time this year as consumers show no plans to buy such durables in the next 12 months.

This is evidenced in the consumers overall buying intention index in the next twelve months, which stood at 36.5 index points. This indicates that majority of consumers believed that the current quarter was not the ideal time to purchase such big-ticket items.

The buying intention indices for consumer durables, motor vehicles and house and lot were below 50 points, indicating that respondents have no plans to make these purchases in the next twelve months.

The fourth quarter (Q4) 2019 Consumer Expectations Survey (CES) was conducted by the Central Bank of Nigeria (CBN) during the period November 18-27, 2019, covering a sample size of 2,070 households drawn from 207 Enumeration Areas (EAs) across the country, with a response rate of 99.9 per cent.

In the survey, respondents’ distribution by educational attainment showed that 8.6 per cent had university education, 10.7 per cent had higher non-university education, while 26.9 per cent had senior secondary school education. Respondents with junior secondary and primary school education accounted for 4.9 and 19.7 per cent, respectively, while those with no formal education accounted for the balance of 29.3 per cent.

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Most respondents expect prices of goods and services to rise in the next 12 months, with an index of 17.0 points. The major drivers are food and other household needs.

With indices of -6.3 and 16.5 points, respectively, consumers expect the borrowing rate to fall, but expect the naira to appreciate in the next 12 months.

The consumers’ overall confidence outlook rose in Q4 2019, as consumers were optimistic in their outlook. The index at 3.3 points was 6.4 points lower than the index in the corresponding period of 2018. Respondents attributed this favourable outlook to improved family income and family financial situation. The consumer outlooks for the next quarter and next 12 months were positive at 19.7 and 30.2 points, respectively.

The outlook could be attributed to the expected increase in net household income, expectations to save a bit and/or have plenty over savings and an anticipated improvement in Nigeria’s economic conditions in the next 12 months.

Robert Asogwa, member of the Monetary Policy Committee (MPC) said the outlook for the Nigerian economy is a little changed from the position from two months ago which was the last MPC meeting for 2019.

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After a soft patch in Q2 GDP growth, which declined to 1.94 percent in Q2 2019 from the Q1 2019 GDP growth of 2.10  percent (revised from 2.01% due to oil output revisions), a subtle turning point appears to have started in Q3 2019 as the GDP growth moved upwards to 2.3 percent.

The central scenario remains that the Nigerian economy will on average grow by 2.3 percent in 2019, but then the growth rate will pick up to about 2.9 percent in 2020, and further to 3.3 percent in 2021.

The unemployment index for the next 12 months remained positive at 21.0 points in Q4 2019, indicating that consumers generally expect the unemployment rate to rise in one year.

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