Nigerians continue to grapple with the high cost of goods and services, having spent a whopping 57.1 billion naira on household items in the first six months of the year.
This is according to the data on Nigeria’s GDP, according to the expenditure and income approach, published by the National Bureau of Statistics (NBS).
Nigerian household consumption expenditure in the first half of 2022 increased by 14.4% compared to N49.89 trillion in the corresponding period of 2021.
Compared to the first half of 2020, which was affected by the covid-19 pandemic and movement restrictions, household consumption expenditures increased by 30.6%, while they increased by 16.4% in contrast with the 49.06 billion naira registered in the same period of 2019.
More data information: Household spending in the first half of the year accounted for 62.4% of total population spending (gross domestic product per spending – N91.41 trillion). The consumption expenditure of non-profit organizations stood at N496.47 billion, which represents 0.5% of the total.
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Government consumption spending decreased by 3.97% year-on-year to N4.06 trillion, accounting for 4.4% of total spending of GDP.
Meanwhile, gross fixed capital formation, which is represented as acquisitions of fixed assets less disposals, stood at N28.5 trillion, accounting for 31.2% of total expenditures.
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A breakdown showed that N27.71 trillion was spent on household consumption in the first quarter of the year, while N29.37 trillion was spent in the second quarter of 2022.
In real value terms, excluding the effect of inflation, Nigerians spent an amount of N27.29 trillion on household consumption, 12.1% more than in the corresponding period in 2021 (N24.35 trillion ). Compared to the nominal increase of 14.4%, there is an inflation effect of 2.29%.
High costs impact household expenses: The rising cost of goods and services, generally known as inflation, has been one of the main nightmares of the Nigerian economy. However, in recent times, due to a chain of global and domestic events, Nigeria’s inflation rate has spiked to tsunami level.
- In September 2022, headline inflation rose to its highest level since September 2005 at 20.77%, caused by a combination of increases in food prices and the core subindex of the inflation basket.
- A further breakdown showed that Nigeria’s food inflation in September, which stood at 23.34%, also accelerated to its highest level since October 2005, while the core index excluding volatile agricultural products accelerated to 17.6% over five years in September 2022.
- NBS data shows that Nigerians spend more than 50% of their household expenses on food, indicating Nigeria’s low level of disposable income among the majority of the population, as prices continue to rise while incomes they remain relatively the same.
- Despite the huge amount spent by Nigerians on domestic consumption, the country still ranks 103rd out of 121 countries in the world in terms of the world hunger index.
Household spending per capita: Based on the Bureau’s assumption that Nigerians spend about half of their household expenditures on food, we could estimate Nigerians’ food expenditures at N28.54 billion for the first six months of the year and a population of 211, 4 million people.
- Further calculations showed that an average Nigerian spends less than N750 on food daily while reports They suggest that a pot of Jollof rice costs an average of nearly N10,000 for a family of five. This is significantly higher than the amount spent daily by the average Nigerian.
- Nigeria’s food supply is currently threatened by raging floods that are ravaging the country’s food-producing areas, causing an astronomical increase in food prices, especially in the southern region of the country.
- In addition, the cost of transportation has skyrocketed, caused by the sudden increase in the cost of gasoline, diesel, and jet fuels. The price of petrol per liter has risen from an average of N165 at the beginning of the year to more than N200 per litre, depending on location. The price of diesel has also tripled so far this year.
Highest Predicted Poverty Rate: According to the World Bank, it is estimated that more than 90 million Nigerians live in poverty, with projections that they will reach 95.1 million by the end of the year, largely due to the domino effect of the covid-19 pandemic and the consequences Russia’s Economic War-Ukrainian War.
The gap between rich and poor is widening at a rapid rate, forcing more Nigerians to live below the poverty line. Nigeria’s unemployment rate, according to the most recent data released by the NBS, is over 33% (Q4 2022), while a number of companies have laid off workers this year in a bid to minimize their rising operating cost, which had been fueled by the high cost of raw materials and energy.
The World Bank in a report noble, “A Better Future for All Nigerians: Nigeria Poverty Assessment 2022” noted that around 17% of Nigerian workers hold the salaried jobs most capable of lifting people out of poverty, leaving a staggering 83% at the expense of poverty.
“Nigeria is currently facing slow growth, low human capital, labor market weaknesses and exposure to shocks, which is holding back poverty reduction in Nigeria.”, stated the bank.
The bottom line: Poverty is arguably the most daunting problem facing Nigeria. The rising cost of goods and services continues to affect the purchasing power of average citizens, forcing more people below the poverty line.
High spending on food consistently means citizens will struggle to spend on non-food items and savings. This, in turn, will negatively affect the economy.