Food items contributed more to consumers’ expenses in 2019 with a record of N40.2 trillion on household consumption. The report by the National Bureau Of Statistics (NBS) has shown.
According to the report, 56.65% (N22.8 trillion) of household expenditure in 2019 was spent on food. The remainder 43.35% (N17.4 trillion) spent on non- food items. It seems the patterns of household expenses recorded little changed since the last report a decade ago. Compared to a decade ago (at N21.6 trillion in 2009/10), household expenditure on food was 60.2% while non-food items constituted 39.8%, representing N13 trillion and N8.6 trillion respectively.
The report, “Consumption Expenditure Pattern in Nigeria.” was based on the recently released National Living Standard Survey (NLSS) covering 35 states of the federation and the Federal Capital. It excludes Borno state because of the level of insecurity in the region.
Within the period under review, consumers spent more on foods consumed outside the home. Most of the food composition includes starch roots, tubers, plantains and rice. Others, including vegetables, seafood, grains, and flours account for a combined 59.19% of food expenditure.
On the non-food side, people expended more on transport, health, education and services, rent, fuel, and electricity. Combined, these represent a total of 79.40%. Services here include information technology and communication equipment. Other things such as insurance, financial services, and so on.
Analysis of Consumers’ spending patterns across geopolitical zones
Analysis of the report showed that consumers in the Northcentral and Northwest spent less on Education compared to consumers from the South-South, Southeast, and Southwest. Overall, consumers in the rural areas spent more on both food and non-food items than those in urban areas.
Why this matters
Household consumption is used as an indicator of living standards, health of the economy, level
of welfare, and the poverty rate of a nation. Consumer spending can be likened to investment spending, production, and living standard. It helps policymakers to make predictions into the economic growth and prosperity of a nation. More spending means more investment, more factories which often leads to more employment opportunities and determine improvement in the citizens’ standard of living. The reverse will be the case when spending dipped.
With the little changed in the share of food in consumer spending, Analysts at Afrinvest say the new development may not lead to lower inflation levels as food index remains the major driver of consumer price index (CPI) in Nigeria.
Will COVID-19 impact consumer spending in Nigeria?
There is an exponential increase in the number of COVID-19 cases in Nigeria. Still, consumers believe the economy will recover faster and are willing to spend. This is according to a survey conducted by Mckinsey & Company in April 2020. Many Nigerians are aware that the COVID-19 crisis will affect their livelihoods and income level. However, the lockdown order will only make consumer shift to online purchases. There will also be increase in spending on household essentials, home entertainment, and fuel.