The consumers’ overall confidence outlook dipped in Q3 2020, as consumers were pessimistic in their outlook Central Bank of Nigeria survey has shown. The index at -21.2 point was 25.0 points lower than the index in the corresponding period of 2019. Respondents attributed this unfavourable outlook to declining economic conditions, family financial situation and declining family income. The consumers were however optimistic in their outlook for the next quarter and next 12 months with indices of 10.1 and 30.5 points, respectively. This positive outlook could be attributed to the expected increase in net household income, an 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
According to the CBN report most respondents expect prices of goods and services to rise in the next 12 months, with an index of 36.2 points. The major drivers are: savings, Purchase of Car/Motor Vehicle, Purchase of Appliances/ durables, Education, food & other household needs and purchase of houses. The overall buying conditions index for big-ticket items in the current quarter stood at 20.1 points. This indicates that 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 & lot. Overall buying intention index in the next twelve months stood at 29.7 index points, indicating that most consumers do not intend to buy big-ticket items in the next 12 months. The buying intention indices for consumer durables, motor vehicles and house & lot were below 50 points, which shows that respondents have no plans to make these purchases in the next twelve months.
The report further said “with indices of 20.8 and 5.3 points, consumers expect the borrowing rate to rise, and anticipate the Naira to appreciate in the next 12 months.
The unemployment index for the next 12 months remained positive at 35.4 points in Q3 2020, indicating that consumers generally expect the unemployment rate to rise in the next one year The Overall consumer confidence index is computed as the average of the three indices, namely: Economic Condition, Family Financial Situation and Family Income. Economic Condition refers to the perception of the respondent regarding the general economic condition of the country. Family Financial Situation refers to the level of savings, investments, other assets including cash at hand and outstanding debts. Family Income includes primary income and receipts from other sources received by all family members as participants in any economic activity or as recipients of transfers, pensions, grants, and the like.
The confidence index or diffusion index is computed as the percentage share of respondents that answered in the affirmative less the percentage share of respondents that answered negative in a given indicator. A positive CI indicates that respondents with a favourable view outnumber those with an unfavourable view, except for unemployment, change in prices and interest rate for borrowing money, where a positive CI indicates the opposite. Buying condition and buying intention indices refer to the assessment of consumers as to whether it is good time, neither good nor bad, or bad time to buy assets (i.e. consumer durables, house and lot, and motor vehicles) during the quarter. An index above 50 means more respondents indicated that it is a good time to buy assets; below 50 means more respondents believe that it would not be an appropriate time to make those purchases; and 50 means the number of respondents on both sides is equal.
