Consumer Confidence Outlook in Q1 Downbeat On Soaring Prices | Independent Newspapers Limited
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Consumer Confidence Outlook in Q1 Downbeat On Soaring Prices

Posted: Apr 20, 2016 at 3:00 am   /   by   /   comments (0)


The average Nigerian consumer is worried that he may have to draw on his savings to meet his daily obligations due to soaring prices, according to the consumer overall confidence outlook for the first quarter of 2016 conducted by the Central Bank of Nigeria (CBN).

According to the financial sector regulator, consumer confidence remains downbeat in Q1 2016 for the first time since Q3 2011.

The report specifically indicates that at -10.3 index points, consumer confidence dipped by 0.3 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 anticipation of drawing down on their savings or getting into debt and deteriorating economic condition,” the report said.

However, the CBN claimed that consumer outlook for the next quarter and next 12 months were positive at 30.0 and 40.9 points, respectively.

The positive outlook in the next quarter, according to the apex bank, could be attributed largely to anticipated improvement in Nigeria’s economic conditions hinged on expectations that the Federal Government’s budget would be signed in the review period.

Consumers also expect increase in their total net household income and expectations to save a bit if the economy is puffed up with economic activities once the budget is signed into law.

The report claimed that consumers’ views were captured across three dimensions, namely: the economic condition, family financial situation and family income. While consumers expressed pessimism in the general economic condition and family financial situation in the current quarter, they expressed optimism in the family income. All the income groups opined that the economic condition and the family financial situation was getting worse as they anticipate drawing down on their savings or getting into debt.

At 30.0 and 40.9 points, the overall consumer confidence index in the next quarter and the next 12 months, respectively, was expected to be better than the outlook in the current quarter.

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 15.0 percent expected, the index dipped by 0.2 points from the 15.2 points recorded in the corresponding quarter of 2015.

The majority of consumers nationwide expect to spend substantial amount of their income on education, food and other household needs, savings, investments, purchase of consumer durables and medical expenses 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.

They equally expect the prices of the following expenditure items to rise in the next quarter: electricity, house rent, education, medical care, food and other household needs, clothing & footwear and personal care.

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.

The overall buying conditions index for consumer in the current quarter for big-ticket items stood at 42.6 percent. This indicates that the majority of consumers nationwide believe that the current quarter was not the ideal time to purchase big-ticket items like motor vehicles and houses.

Buying condition refers to the assessment of consumers as to whether it is good time, neither good nor bad or bad time to buy assets (ie. consumer durables, house and lot, and motor vehicles) during the quarter.

Majority of the consumers nationwide expect unemployment to rise in the next 12 months. The unemployment index for the next 12 months obtained in Q1 2016 remained positive at 10.0 points compared with the 20.5 points in Q1 2015. With indices of 3.0 and -1.7 points, consumers expect borrowing rate to rise and exchange rate to depreciate in the next 12 months.