The average Nigerian is not financially capable of absorbing increasing commodity prices says research firm SB Morgen Intelligence.
Following the weakening currency consequent upon the slump in the price of oil, and a fuel shortage that almost crippled economic activity in the country and sent prices of consumer goods northward, consumers have had to pay higher nominal costs for goods and services.
And the price of consumer goods could be set to increase further, says the firm, after an average price increase of about 10% over the last six months, putting more strain on the average Nigerian worker who is already spending about 60% of earnings on feeding, according SB Morgen’s estimates.
Also, the Naira tested a new level of N230 to the Dollar, and fell even further to N231.
The rise in prices is a result of the overbearing influence of various factors that range from seasonal changes, increased production and handling costs and weaker foreign exchange rates.
Although some of the increase in the price of some commodities were expected due to the change of season, a significant number of commodities recorded increases in price due to other contingent reasons that came up in the period under review like the petroleum product scarcity in May, and the plummeting value of the naira in the foreign exchange market.
“Living standards are expected to drop further with the upsurge in the price of consumables at a time when the average Nigerian is least empowered socially and financially to overcome the challenge posed by rising food and commodities price,” stated the firm in its report.
The research, which sampled 500 workers in the Lagos area, revealed that 90% of the workers who fall under the minimum wage category of N18,500 spend almost 60% of their annual income on feeding, 20% on transportation and the other 20% on miscellaneous expenditure, leaving them with no savings.
“The average Nigerian is presently not well placed financially to cope with the rapidly increasing price of commodities,” the report said. “This is due to the fact that the Public Service (the major employer of labour in the country), which is responsible for the income of a majority of the country’s workforce, has been bedevilled by serious cash flow problems thereby affecting the wages of their workforce.
As a matter of fact, over 10 of the 36 states of the federation presently owe their workers at least 2 months wages, with others meeting their wage obligations beyond the due dates. This in itself poses a serious challenge as the average Nigerian not only faces the challenge of increasing prices, but also a scarcity of funds to meet up the daily spending requirements.”
SBM says that the overall picture does not look too good in the short term. The upward trend of the price of consumer goods and economic hard times experienced by Nigerians, which have led to the reduction in their purchasing power are perhaps foretelling signs that corporate sales might start slowing down, which will translate to slower growth of the economy.
Edozie Ifebi
