Business

June 18, 2024

Cost of Living: Households reduce consumption expenditure

Cost

File image for illustration.

By Elizabeth Adegbesan 

At the backdrop of the escalating cost of living crises, the National Bureau of Statistics, NBS, has released the long awaited ‘Gross Domestic Product (GDP) Report by Expenditure and Income Approach’, the first since second half of 2023, H2’23, showing negative shift in household consumption expenditure.

The report covering third quarter and fourth quarter 2023, indicated that Nigerian households reduced their consumption expenditure Year-on-Year (YoY)  to -13.7 percent during the period from -12.47 percent in Q4’22.

The period covered by the report is approximately six months into the fuel subsidy removal and exchange rate floatation regime, the two policies that drove price instability in the economy.

The decline in household consumption expenditure reflects the sustained upward pressure in the prices of goods and services during the period which lingers till now, also indicating that the consumption expenditure index is expected to have gone down further by now.

The NBS report stated: “Household final consumption, in real terms, grew by -10.12 percent and -13.68 percent in Q3 and Q4 of 2023 respectively, on a YoY basis.  

“Moreover, these growth rates were lower compared to the growth rates of the corresponding quarters of 2022 which stood at -5.83 percent and -12.47 percent.  

“The observed trend in recent times indicates that real household consumption expenditure declined since Q2 of 2022 but improved in Q2’23 when the growth rate was 7.08 percent.

“However, household consumption expenditure declined in the subsequent quarters of Q3 and Q4 of 2023, accounting for negative growth rates of -10.12 percent and – 13.68 percent.  

“The growth rates of Q3’23 and Q4’23 indicate lower rates relative to the corresponding quarters of Q3’22 and Q4’22.  

“On a quarter-on-quarter basis, real household consumption expenditure decreased by 5.13 percent in Q3 of 2023 and declined by 1.4 percent in Q4’23.

“Household consumption accounted for 56.8 percent of real GDP at market prices in Q3’23, and 50.4 percent in Q4’23.” According to NBS, the GDP at market prices   grew YoY in real terms by 2.54 percent in Q3’23 and 3.46 percent in Q4’23.  

“This shows a sustained positive trajectory of the growth of the economy. 

 

“This indicates a rise of 0.3 percentage   points from the figure recorded in Q3’22 which was 2.25 percent and 0.05 percent points fall compared to Q4’22 growth at 3.52 percent.  

“However, on an annual basis, GDP grew by 2.74 percent in 2023, a decline of 0.36 percentage points from the growth reported in 2022 (3.1 percent).”