Household consumption in Nigeria fell sharply in real terms in 2024, as soaring prices stripped millions of families of their purchasing power, according to provisional figures from the Central Bank of Nigeria’s latest statistical bulletin.
Data on gross domestic product by expenditure show that household final consumption expenditure, measured at 2010 constant purchasers’ prices, dropped from N45.41tn in 2023 to N31.12tn in 2024. The fall of about N14.29tn – roughly 31% year on year – signals a dramatic contraction in the actual volume of goods and services consumed by households.
Constant-price figures strip out the effect of inflation, offering a clearer picture of real economic activity. When this measure collapses, as it did last year, it suggests households are not merely paying more for the same basket of goods, but are materially cutting back on what they can afford.
Yet the same indicator measured at current purchasers’ prices tells a starkly different, and revealing, story. In nominal terms, household consumption rose from N146.69tn in 2023 to N173.01tn in 2024 – an increase of about N26.31tn, or nearly 18%. Nigerians, in other words, spent more naira but consumed far less in real terms.
The divergence highlights the scale of the inflation shock. Rising prices swallowed a growing share of household budgets, leaving families worse off despite higher nominal spending.
This squeeze is consistent with Nigeria’s persistently high inflation throughout 2024. Headline inflation opened the year at 29.9% in January, already elevated from about 28.9% in December 2023. It climbed steadily over the year, reaching around 34.8% by December – one of the highest annual rates in the past decade.
Food inflation and rising prices for other essentials were key drivers, with inflation accelerating slightly towards the end of the year. The result was a prolonged cost-of-living crisis that pushed many households to the edge. Food, transport, energy and accommodation costs surged, forcing families to prioritise basic survival and abandon discretionary spending.
Even staple foods moved beyond the reach of many low-income earners, while the removal of petrol subsidies and exchange-rate pressures filtered through almost every aspect of daily life.
The data also point to a troubling erosion of real earnings. Compensation of employees, measured at 2010 constant purchasers’ prices, fell from N28.27tn in 2023 to N25.48tn in 2024 – a decline of about N2.78tn, or nearly 10%. Adjusted for inflation, the total value of wages and salaries shrank, meaning workers’ pay bought less than it did a year earlier.
At current prices, however, employee compensation rose from N63.83tn to N75.59tn, a nominal increase of about 18%. As with household consumption, pay packets grew on paper but failed to keep pace with inflation. Real incomes fell, reinforcing the pressure on household spending.
Economists rely on constant-price indicators to judge whether an economy is genuinely expanding or contracting. From that perspective, the slump in real household consumption points to weakening domestic demand – a key engine of economic growth.
Household spending typically accounts for the largest share of GDP on the expenditure side. When consumers retrench on this scale, the effects ripple through retail, manufacturing, services and hospitality, translating into lower sales, slower production and weaker investment.
Business leaders and economists have repeatedly warned about the risks. Earlier in 2024, the chief executive of the Centre for the Promotion of Private Enterprises, Muda Yusuf, described persistent inflation as deeply troubling, saying purchasing power had continued to slide, pushing more Nigerians into poverty.
“The major inflation drivers are not receding; if anything, they have become even more intense,” Yusuf said, pointing to exchange-rate depreciation, rising transport and logistics costs, diesel prices, insecurity in farming communities and structural bottlenecks to production. He also warned that the weakening naira was encouraging the cross-border outflow of agricultural produce, further tightening food supply at home.
Rising inflation, he added, was driving up production costs, eroding profitability, undermining shareholder value and denting investor confidence – conditions that raise the risk of stagflation.
Small businesses have felt the strain acutely. By January 2024, the president of the Association of Small Business Owners of Nigeria, Femi Egbesola, said inflation had reduced consumer purchasing power, raised costs and made businesses less attractive to investors, weakening the wider economy.
The human cost is becoming clearer. According to the World Bank’s Macro Poverty Outlook, low labour incomes combined with high inflation pushed an estimated 14 million Nigerians into poverty in 2024. Nearly 47% of the population now lives below the international poverty line of $2.15 a day.
“Labour incomes have not kept pace,” the report said, warning that poverty could rise further without reforms to protect the poorest and boost livelihoods through more productive work. While the government has rolled out temporary cash assistance for 15 million households, the World Bank cautioned that macroeconomic stabilisation alone would not be enough.
With economic growth struggling to keep pace with population growth, and inflation continuing to erode real incomes, the collapse in household consumption stands as one of the clearest signals yet of the depth of Nigeria’s economic strain in 2024 – and of the scale of the challenge facing policymakers in the years ahead.
