Household spending in Nigeria plummeted by a staggering N14 trillion in 2024 as soaring inflation ate into the purchasing power of millions, according to provisional data from the Central Bank of Nigeria. Real household consumption fell from N45.41tn in 2023 to N31.12tn last year, representing a sharp 31% drop, signaling that families were buying significantly fewer goods and services, not just paying more for the same items.
Despite this, nominal spending at current prices actually rose from N146.69tn to N173.01tn, an 18% increase. This contrast highlights a painful reality: Nigerians are spending more naira but receiving less value, as inflation—driven largely by rising food, transport, energy, and accommodation costs—continues to erode everyday household budgets.
The squeeze on wages mirrored this trend. Real employee compensation fell nearly 10% in constant prices, while nominal wages rose by 18%, showing that salary increases failed to keep pace with the cost of living. Economists warn that these declines in real incomes could slow domestic demand, affecting retail, manufacturing, and service sectors that rely heavily on consumer spending for growth.
The social impact has been dramatic. With inflation averaging 34.8% in December 2024 and essential goods becoming increasingly unaffordable, roughly 14 million more Nigerians fell into poverty last year. Nearly 47% of the population now lives below the international poverty line of $2.15 per day. Organizations like the World Bank have urged government reforms to protect the most vulnerable, including temporary cash assistance programs targeting 15 million households.
Experts caution that without urgent structural reforms, Nigeria risks prolonged economic stagnation. Rising production costs, currency depreciation, and persistent supply chain issues continue to challenge businesses, eroding investor confidence and limiting growth. For ordinary Nigerians, the message is clear: everyday survival is becoming costlier, and strategic economic reforms are essential to restore purchasing power and household stability.
source: punch