More than two-thirds of Nigerians who have experienced an increased cost of living are reducing their spending on essential and non-essential items, a new report has said.
The report titled ‘Talent Management, A New World Order: Shifting Paradigms’ by Phillips Consulting Limited, a Nigerian business and management consulting firm surveyed 1,054 Nigerian adults aged 18 or older between August 24 and September 3, 2022. The survey conducted online incorporated research from YouGov and Cambridge University’s globalism survey.
A breakdown of the survey revealed that the most common lifestyle changes they had made as a result of rising prices were spending less on nonessentials that is luxury (90 percent cut), holidays within Nigeria (72 percent cut), and holidays outside Nigeria (63 percent).
Others cut down on spending on clothes (90 percent), going out for a meal (85 percent), going out for a coffee or drink (81 percent), and food shopping (69 percent) and cut down on subscriptions and membership (digital TV, Gym – 81 percent).
“As living costs continue to rise, low-income households are disproportionately affected, with many being forced to cut back on essentials,” it said.
It said this situation is causing a decline in living standards, which hurts physical and mental health and exacerbates existing conditions.
Inflation in Africa’s most populous nation has been at a 17-year high since July last year, owing largely to the fallout of the Russia-Ukraine war.
In April 2023, it rose for the fourth consecutive time to 22.22 percent from 22.04 percent in the previous month, according to the National Bureau of Statistics.
Food inflation, which constitutes 50 percent of the inflation rate, rose to 24.61 percent in April from 24.45 percent in the previous month.
Analysts said the current economic situation in the country is causing significant financial difficulties for many people. “Eighty-six percent of Nigerians reported that they were either coping or finding it difficult on their current income in today’s financial situation,” they said.
They added that furthermore, 65 percent of Nigerians reported that the cost of living had increased significantly, while 11 percent reported that the cost of living had only increased slightly.
“The repercussions of rising daily costs go far beyond a mere economic squeeze. Failure to meet fundamental needs such as food, rent, transportation, healthcare, and education can lead to a multitude of detrimental effects on mental health and overall well-being,” they said.
Last year, the World Bank said Nigeria’s accelerated inflation growth had eroded the N30,000 minimum wage by 35.5 percent and widened the poverty net with an estimated five million people in 2022.
In its latest Nigeria Development Update report, the international organisation, said the higher inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly through higher prices of local staples- rice, bread, yam, and wheat, especially in non-rural areas.
“Between 2020 and 2022, for instance, the inflation shock has pushed an estimated 15 million Nigerians into poverty.”
The report highlighted that the minimum wage, which was $82 in 2019, had dropped to $26. “Consumer price inflation had heightened, making it one of the highest in the world.”
“The increased cost of living is causing numerous households to reduce spending, even on necessary items, and low-income families are most vulnerable to this. As a result, living standards are decreasing,” the pcl report said.
It recommends that it is imperative that the Nigerian government realistically reviews the minimum wage and considers possible interventions to help reduce the severity of these challenges.