High inflation decreases household consumption, worsened by subsidy removal
By Jeph Ajobaju, Chief Copy Editor
High prices of goods and services slashed consumption expenditure 4.07 per cent in 2022 against an increase of 25.6 per cent in 2021, the latest figures published by the National Bureau of Statistics (NBS) show.
The decline will likely continue, at least in the short term, sequel to the removal of fuel subsidy on May 29, with the multiplier effects now driving up inflation through higher transport costs that raise the prices of all goods and services.
The NBS disclosed in the Gross Domestic Product (GDP) Report (Expenditure and Income approach) for the fourth quarter of 2022 (Q4 2022) that “on an annual basis, real Household Consumption Expenditure in 2022 grew by -4.07 percent compared to 25.6 percent in 2021.”
But in nominal terms, household consumption expenditure rose 19.9 per cent year-on-year (YoY) from N108.5 billion in 2021 to N130 billion in 2022, according to the NBS.
Nominal household consumption expenditure was N29.3 billion in Q1 2022, then jumped 2.8 per cent quarter-on-quarter (QoQ) to N30.13 billion (Q2 2022), 16 per cent to N35.05 billion (Q3 2022), and 1.6 per cent to N35.6 billion (Q4 2022).
“The observed trend since 2020 indicates that real household consumption expenditure declined in Q1 and Q2 of 2020, accounting for negative growth rates informed by the pandemic,” the report said, per Vanguard.
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Other quarterly growth rates
However, growth rates were recorded from Q3 2020 as recovery from the pandemic was witnessed, while growth became negative in Q2 to Q4 2022 due to rising prices and challenging economic conditions.
The NBS added “household final consumption, in real terms, grew by -5.83 percent and -12.47 percent in Q3 and Q4 of 2022 respectively, on a YoY basis.
“However, these growth rates were lower compared to the growth rates of their corresponding quarters of 2021 which were 19.36 percent and 7.30 percent respectively.
“In Q3 and Q4 of 2022, growth rates were -5.83 percent and -12.47 percent, showing lower rates relative to the corresponding quarters of 2021.
“On a QoQ basis, real household consumption expenditure grew by 13.02% in Q3’22, and 2.6 percent in Q4’22.
“Household consumption accounted for 65.17 percent of real GDP at market prices in Q3 of 2022, and 60.25 percent in Q4’22.”
