New findings reveal that Nigerians are increasingly turning to cheaper, often lower-quality goods and services, a practice known as “downtrading,” as the country grapples with rising inflation, a weakening currency and surging fuel prices.

These economic challenges, according to analysts from Lagos-based Financial Derivatives Company (FDC), are exerting immense pressure on households, forcing millions to adopt survival strategies to cope with the worsening cost of living.

Economists define the cost of living as the general price level of goods and services that an average consumer purchases for daily living.

Nigeria’s inflation rate jumped to 32.15 percent in August 2024, making essential goods like food, housing and healthcare increasingly unaffordable. The sharp rise in fuel prices has compounded the situation, escalating transportation costs and forcing many Nigerians into tough decisions, such as skipping meals or avoiding medical care.

According to Numbeo, a data and research platform, Nigeria ranked as the fifth African country hardest hit by the global cost-of-living crisis with a score of 31.4, while Cameroon leads with 37.3.

Experts warn that this situation not only threatens household welfare but also poses risks to the long-term stability of Nigeria’s economy and society.

Economic and financial analysts explain that when inflation diminishes purchasing power, consumers tend to shift toward cheaper alternatives in food, clothing and services.

“There is clear evidence that Nigerian consumers have reduced both the quality and quantity of their purchases,” say analysts at the Bismarck Rewane-led FDC Limited. For instance, the price of flour has risen from N35,000 to N65,000 over the past year, yet the volume of sales has declined, though overall revenue has increased.

Also, Nestlé Nigeria has noted a decrease in consumer demand, which led to a negative performance metric in 2023. The company’s focus in 2024 is on restoring sales volumes.

The impact of rising fuel costs has also been significant. Speaking on Channels TV programme, FDC Senior Associate, Dumebi Oluwole, noted that people are becoming increasingly frustrated due to the challenges of acquiring fuel.

She explained that the increased global crude oil prices are driving up the cost of petroleum products, which Dangote Refinery is now pricing based on production costs, is squeezing consumers, who are now paying more for less.

The escalating cost of living in Nigeria is eroding the quality of life for many. According to Numbeo, a family of four in Lagos requires N1.24 million monthly, excluding rent, while a single person needs N343,092.

In contrast, the national average cost of living for a family of four is estimated at N150,000. Major urban centres like Lagos, Port Harcourt and Abuja face the highest living costs, while northern cities like Kano and Sokoto remain relatively cheaper due to their proximity to staple foods such as grains and rice.

Nigerian Tribune analysis reveals that housing and transportation represent significant expenditures for Nigerians. Before the removal of the fuel subsidy, a road trip from Lagos to Port Harcourt cost N10,500. Today, that same trip costs N28,500. Food prices have similarly soared, with a basic lunch in Lagos now costing N2,119 and a fast-food combo meal priced at N3,174.

A survey by Nigerian Tribune reveals that a 50kg bag of long-grain rice, which cost N84,000 in August, now costs N120,000. Flour (50kg) has risen from N62,000 in August to N65,000, while sugar (50kg) increased from N80,000 to N83,000.

Similarly, a 50kg bag of beans (oloyin) that sold for N150,000 in August now goes for N180,000. Cement prices have also risen by 13.51 percent from N7,400 in August to N8,400 in October, primarily due to the increasing cost of natural gas, the primary energy source in cement production and rising logistics costs.

These hikes are expected to affect the cost of building materials, roads and bridges, further straining the construction and real estate sectors.

Similarly, the soaring prices are pushing more Nigerians toward cheaper, less nutritious food options, which have serious long-term health implications.

According to the National Bureau of statistics (NBS), the national average cost of a healthy diet was N1,241 in June 2024, a 19.2 percent higher than the amount recorded in the previous month (N1,041). The same average cost of a healthy diet rose to N1,255 in August 2024.

In September 2024, the World Bank ranked Nigeria fifth globally in food insecurity and third in Africa, trailing only Malawi and Liberia. Between August 2023 and September 2024, the number of food-insecure people in Nigeria increased by 28 percent, further exacerbating the crisis.

Several factors, according to experts contribute to Nigeria’s high cost of living, including inflation, fluctuating exchange rates, government policies and the high cost of production.

With one of the highest inflation rates in Africa, the purchasing power of the naira has been dramatically weakened. The country’s minimum wage of N30,000 is insufficient to cover basic needs, especially as prices continue to skyrocket. While a new minimum wage is pending implementation, the current wage level is contributing to rising poverty.

Data from the NBS indicates that over 133 million Nigerians are living in poverty. Analysts predict that inflation will continue to rise, making survival even more difficult for families.

Despite the rise in expenses, household incomes have remained stagnant due to Nigeria’s sluggish productivity growth. This mismatch between income and expenses is forcing many families to rely on loans and credit, which could lead to an increase in non-performing loans, further straining the banking sector.

The General Household Survey from 2010 showed that income sources in Nigeria have largely remained unchanged, with agriculture, trade and wages being the primary sources. However, there has been some progress, particularly among younger generations who have embraced technology-driven sectors such as fintech, content creation and software development. These new income streams have benefited a segment of the population, but they remain inaccessible to many, especially older individuals.

Analysts argue that unless inflation is brought under control, wage increases will offer little relief to Nigerian families. Experts view widespread downtrading as a symptom of a deeper economic malaise that policymakers must urgently address. If left unchecked, this economic decline could result in long-term damage to Nigeria’s social fabric, impacting public health, educational outcomes and increasing inequality.

Nigeria is facing an escalating cost-of-living crisis that is affecting households across the country. As inflation erodes purchasing power and fuel prices drive up the cost of goods and services, Nigerians are turning to cheaper alternatives, a trend that has serious implications for health, wellbeing and economic stability.

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