The latest report from the National Bureau of Statistics (NBS) has revealed a significant decline in household final consumption in Nigeria during the fourth quarter of 2022. According to the Nigerian Gross Domestic Product Report (Expenditure and Income Approach) for Q3 and Q4 2022, household consumption experienced a negative growth rate of -12.47 percent, compared to the 7.30 percent growth rate recorded in the same quarter of the previous year.
The report highlighted that household final consumption, in real terms, witnessed a decline of -5.83 percent and -12.47 percent in Q3 and Q4 of 2022, respectively, on a year-on-year basis. These growth rates were notably lower than those recorded in the corresponding quarters of 2021, which stood at 19.36 percent and 7.30 percent, respectively.
The NBS attributed the negative growth to the adverse impact of inflation and challenging economic conditions prevailing in the country. Rising prices and economic difficulties resulted in negative growth rates during the second to fourth quarters of 2022. Specifically, Q3 and Q4 of 2022 saw growth rates of -5.83 percent and -12.47 percent, respectively, indicating a decline compared to the corresponding quarters of the previous year.
The report also revealed that while household consumption grew by 25.65 percent for the entire year of 2021, it weakened to -4.07 percent in 2022. Household consumption, which encompasses expenditures made by resident households on various goods and services, accounted for 65.17 percent of Nigeria’s real GDP at market prices in Q3 2022 and 60.25 percent in Q4 2022, as per the NBS data.
Despite the negative growth rate, household consumption expenditure reached N130.08 trillion in 2022, indicating an increase of N21.61 trillion or 16.61 percent compared to the previous year’s figure of N108.47 trillion.
Inflation played a significant role in driving up the expenditure of Nigerians. The country’s inflation rate continued to rise, reaching 22.22 percent in April 2023, marking the fourth consecutive month of increase and maintaining a 17-year high. This represented a 0.18 percentage point increase from the previous month’s rate of 22.04 percent. Moreover, April’s inflation rate was 5.40 percentage points higher than the rate recorded in the same month of the previous year, which stood at 16.82 percent.
The NBS’s Commodity Price Index report for April 2022 identified key sectors contributing to the inflation figures, including food and alcoholic beverages, housing, water, electricity, gas, other fuels, clothing, footwear, and housing.
Industry experts and representatives have shared their views on the matter. Gabriel Idahosa, the Deputy-President of the Lagos Chamber of Commerce and Industry, criticized the previous government’s failure to address inflation issues. However, he expressed optimism that with the right economic policies, the country may start to witness a slowdown in the inflation rate by the third quarter of this year.
Segun Kuti-George, the Vice President of the Nigerian Association of Small-Scale Industrialists, pointed to over-importation of foreign goods as the primary driver of inflation in the country.
As Nigeria continues to grapple with rising inflation and challenging economic conditions, policymakers and stakeholders are expected to focus on implementing measures to mitigate inflationary pressures and support sustainable economic growth, with the aim of stabilizing household consumption in the future.