Sandra Beldine Otieno
November 16, 2023
Kasi Insight's Cost of Living Tracker provides an in-depth examination of consumer behavior amidst rising inflation. It focuses on their primary concerns within the nation, identifies sectors witnessing significant price increases, explores their strategies for managing inflationary pressures, and tracks the evolving trends in spending habits. Conducted quarterly across 20 different African markets, this tracker offers a comprehensive view of the intricate dynamics influencing consumer responses to the changing economic landscape.
In Nigeria, between 2022 and 2023, there was a discernible divergence in respondents' perceptions regarding the extent of price increases across various sectors. The overall extent of price increases remained stable, with respondents consistently reporting no change in the perceived extent of price increases, maintaining a rate of 67%. In the food and beverage sector, there was a modest 2% uptick in the perceived extent of price hikes, reaching 53%. The utilities sector witnessed a more pronounced shift, as respondents indicated a 5% increase in the perceived extent of price increases, rising from 68% in 2022 to 73% in 2023.
Conversely, several sectors experienced a contraction in the perceived extent of price increases. Notably, household furniture and appliances, housing and rent, transportation, and clothing and shoes all saw declines of 4%, 1%, 3%, and 4%, respectively. On the positive side, respondents in the Alcoholic Beverages and Education sectors reported increments of 3%, reaching perception rates of 68% and 72%. The recreation and communication sectors demonstrated relative stability, with perception changes of 0% and -1%.
Examining responses regarding coping mechanisms with rising prices between 2022 and 2023 reveals changes in consumer behavior. The inclination to purchase cheaper alternatives, brands, or items experienced a substantial decline from 67% to 46%, indicating a significant shift of -21%. Similarly, the active pursuit of sales and promotions dropped markedly from 52% to 29%, reflecting a considerable change of -23%.
Conversely, there was a notable increase of 17% in the adoption of alternative purchasing habits, including strategies like buying less meat, reducing take-out expenses, and embracing second-hand goods, rising from 26% to 43%. Modest but positive changes were observed in delaying non-essential purchases (6% increase from 23% to 28%) and making lifestyle adjustments to reduce costs, such as sharing a vehicle for regular trips (5% increase from 20% to 25%).
The utilization of community services, such as feeding programs and contributions to faith-based organizations, saw a substantial uptick of 9%, rising from 15% to 23%. Additionally, the proportion of individuals relying on savings to cover expenses saw a slight increase from 14% to 17%, representing a change of 2%.
The data presents a nuanced scenario for both value and premium brands in Nigeria during this holiday shopping season, reflecting a complex interplay of consumer perceptions and coping strategies amidst rising prices. While respondents reported a consistent perception of the extent of price increases overall, the specific sectoral variations suggest that consumers are employing diverse coping mechanisms in response to rising prices.
For value brands, the decline in the preference for purchasing cheaper alternatives (-21%) and the reduced emphasis on actively seeking sales and promotions (-23%) may pose challenges for value brands, indicating a more cost-conscious consumer base. However, the positive shift in adopting alternative purchasing habits and the community-centric approach may offer new avenues for value brands that align with these changing preferences.
For premium brands, the observed trends of delaying non-essential purchases and making lifestyle adjustments to reduce costs highlight a need for adaptation. The increased reliance on community services and a modest rise in savings could suggest a more cautious approach toward discretionary spending. Premium brands may need to emphasize value propositions, such as durability and quality, to maintain their appeal amid evolving consumer behaviors.
Share on social media using this caption: Navigating the ebb and flow of prices in 2023! 📈💸 Sectoral insights reveal the diverse ways Nigerians adapt to changing economic tides. From shifting perceptions to innovative coping strategies, we're decoding the trends that matter. 💡🔄 #PriceShifts #ConsumerInsights #EconomicAdaptation
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