Nigerian households are expected to spend the majority of their income on food in the coming months due to rising inflation, according to a recent survey conducted by the Central Bank of Nigeria (CBN).

The latest data from the National Bureau of Statistics (NBS) places the inflation rate at 33.40 per cent, with food inflation exceeding 40 per cent. The CBN survey, conducted between July 22 and 26, 2024, sampled 1,665 households from across the country, achieving a 99.7 per cent response rate.

The Household Expectation Survey, published on the CBN’s website, reveals that many Nigerians plan to cut down on non-essential items in the next three to six months, with 54.9 per cent of their income likely to be allocated to food purchases.

“Consumers plan to spend a substantial portion of their income on food and other household items (54.9 per cent), education (35.4 per cent), transportation (30.2 per cent), electricity (20.0 per cent), and medical expenses (12.2 per cent) over the next six months,” the survey indicated.

Conversely, respondents do not plan to spend significantly on big-ticket items such as houses, cars, or household appliances. Investments in property or other forms of savings are also unlikely, reflecting the financial strain many households are currently experiencing.

“This indicates that many families will be drawing down on their savings or accruing debt to meet their needs,” the CBN report noted.

The overall perception of inflation in July 2024 was that 83.7 per cent of respondents believed it to be excessively high, with a pessimistic index score of -61.1 per cent. A breakdown of responses showed businesses had a slightly less negative outlook compared to households, with an index of -58.7 points against -63.3 per cent.

Further analysis by income group revealed that those earning between ₦150,001 and ₦200,000 per month were the most concerned about inflation, with a negative index of -66.4 per cent. Higher earners, with incomes above ₦200,000, had a slightly less pessimistic outlook, scoring -58.3 per cent.

The CBN survey also highlighted expectations that the naira would continue to depreciate in the next three months but could potentially recover in six months. The naira fell to ₦1,598 per US dollar on Friday, marking the end of August on a negative note, and further declined to ₦1,639 due to a shortage of the US currency.

Respondents expressed optimism that the CBN’s monetary policy decisions might help the battered naira recover in early 2025. However, they anticipated that inflation, borrowing rates, and unemployment would continue to rise in the near term due to ongoing macroeconomic pressures.

“The survey showed that 80.9 per cent of respondents believed the economy would weaken further if prices rise faster than they currently do,” the CBN report stated.

Key factors driving inflationary perceptions among businesses included rising energy costs, which increased from 90.6 points in June to 91.8 per cent in July, and a consistently high exchange rate, which slightly increased from 88.3 in June to 88.8 in July. Transportation costs also contributed to inflationary pressures, with an index of 88.5 per cent during the review period.