By Charles Abuede
In the next 12 months Nigerians have built an expectation that the domestic currency, the naira, will appreciate, and a moderation in inflation and gradual fall in borrowing rates, a survey conducted by the Central Bank of Nigeria (CBN) has revealed.
These Nigerians think buying big-ticket items like cars and houses would not be advisable in the next 12 months on account of their anticipation of a modest rise in the value of the naira in the currency market, while inflation rate and interest rate for borrowing are also expected to fall gradually in the new year.
Conducted in the fourth quarter of this year and covering over 2,000 households, it confirmed that consumers were optimistic, however, in their outlook for the next quarter and next 12 months with indices of 10.5 and 28.9 points, respectively. This positive outlook could be attributed to the expected increase in net household income, anticipated improvement in Nigeria’s economic conditions and expectations to save a bit and/or have plenty over savings in the next quarter and the next 12 months.
On the inflation rate, Nigerians expect prices of goods and services to moderate in the next 12 months, with an index of 43.1 points. The major drivers for this moderation are motor vehicle, and purchase of houses. Similarly, a majority of consumers believed that the current quarter was not the ideal time to purchase big-ticket items like consumer durables, motor vehicles and house.
The CBN quarterly publication also showed that consumers’ overall confidence outlook was pessimistic in Q4 2020 with a further analysis of the responses attributing this unfavourable outlook to declining economic conditions, family financial situation and declining family income.
On the other hand, the unemployment index for the next 12 months remained positive at 36.9 points, indicating that consumers generally expect the unemployment rate to fall next year, while consumers expect the borrowing interest rate to rise negatively.