Cost-of-living squeeze forces Nigerians to delay homes, cars...

Nigeria’s cost-of-living crisis is increasingly reshaping household economic behaviour, with consumers cutting back on major purchases as pessimism over income, family finances and the wider economy deepened in September.

The Central Bank of Nigeria’s latest Household Expectations Survey showed overall consumer sentiment plunging to minus 18.7 points in September from minus 9.9 points in August, an 8.8-point deterioration that points to weakening household purchasing power and confidence.

The squeeze was most visible in major spending decisions. Household sentiment on house purchases fell to minus 68.2 points, while car and motor vehicle purchases stood at minus 67.3 points. Investment intentions were also deeply negative at minus 50.7 points, followed by household appliances and other consumer durables at minus 49.5 points and rent at minus 32 points.

The figures suggest that households are increasingly postponing expenditure that requires significant upfront cash, with income being directed towards immediate necessities instead.

The CBN said buying conditions for major purchases remained below the 50-point threshold across the survey periods, while actual willingness to purchase buildings and landed property, motor vehicles and consumer durables stood at just 14.8, 15.7 and 19.4 points respectively.

For the economy, the implications go beyond household comfort. Weak demand for homes, vehicles, appliances and other durable goods can affect construction, manufacturing, real estate, auto dealerships, finance and retail businesses, weakening the broader chain of economic activity.

The deterioration in sentiment was also evident in households’ assessment of their finances. The family financial situation index fell to minus 23.9 points, while the family income index stood at minus 10.5 points. The economic conditions index was similarly negative at minus 21.5 points.

The latest readings indicate that many households remain unconvinced that current economic conditions have improved sufficiently to support higher discretionary spending.

Prices remain central to the problem. The CBN’s consumer sentiment index for average prices of selected items rose to 33.5 points in September from 23 points in August, showing that households perceived prices to be significantly higher.

Food remained the dominant expenditure priority, followed by transportation, household goods, education, electricity and water.

The pressure is particularly significant for lower-income Nigerians. The CBN’s previous survey showed that 68.4 per cent of households earning below N70,000 perceived inflation as high in August, while the proportion of households reporting high inflation perception rose to 77.2 per cent in September.

The result is an economy in which households are prioritising survival spending over asset accumulation and investment.

That shift matters for Nigeria’s growth ambitions because household demand is a major driver of business revenue. When consumers postpone buying cars, homes, appliances and other goods, companies face weaker sales, while developers, manufacturers and retailers may delay expansion and hiring.

There is some hope of improvement over the longer term. Consumer sentiment remains negative over the next month and three months, at minus 8.7 and minus 0.4 points respectively, but turns positive at 7.1 points over the six-month horizon.

The outlook suggests households expect conditions to improve gradually, but the September figures show that relief has yet to reach major spending decisions.

For policymakers and businesses, the latest survey provides a clear warning: lower headline inflation alone will not restore consumer confidence unless incomes, purchasing power and the cost of essential goods improve enough for Nigerians to move from managing daily expenses to making longer-term economic commitments.