Advertising budget likely to fall as inflationary pressures cut deep
By Oghale Mafuru
Against the backdrop of the recent report from the National Bureau of Statistics (NBS) which indicated an upsurge in inflation rate compared to preceding years, advertising spend in Nigeria is expected to fall as inflationary pressures weigh in on consumption expenditure.
According to the report by the National Bureau of Statistics (NBS), Nigeria’s inflation rate surged to over 20.52% in August up from 19.64% recorded in July, the highest since September 2005.
It reads: “In September 2022, on a year–on- year basis, the headline inflation rate was 20.77%. This was 4.14% points higher compared to the rate recorded in September 2021, which was (16.63%). This indicates that in the month of September 2022 the general price level was 4.14% higher relative to September 2021.
Statistics of urban inflation shows on a year-on-year basis, in the month of September 2022, the urban inflation rate was 21.25%, which was 4.06% higher compared to the 17.19% recorded in September 2021. On a month-on-month basis, the urban inflation rate was 1.46% in September 2022, this was a 0.34% decline compared to August 2022 (1.79%).
The corresponding twelve-month average for the urban inflation rate was 17.94% in September 2022. This was 0.53% higher compared to the 17.41% reported in September 2021.
Meanwhile, the rural inflation rate in September 2022 was 20.32% on a year-on-year basis; this was 4.24% higher compared to 16.08% recorded in September 2021. On a month-on-month basis, the rural inflation rate in September 2022 was 1.27%, down by 0.48% compared to August 2022 (1.75%).
The corresponding twelve-month average for the rural inflation rate in September 2022 was 16.94%. This was 0.68% higher compared to the 16.26% recorded in September 2021.
According to the National Bureau of Statistics, likely factors responsible for the increase in annual inflation rate (Year-on-Year basis) are disruption in the supply of food products, Increase in import cost due to the persistent currency depreciation and general increase in the cost of production.
Based on a survey conducted by the World Federation of Advertisers, WFA, recently, 30% of major advertisers confirmed an ad budget cut into next year while 74% stated that the economic downturn is influencing their 2023 budget decisions.
The report added that even though there’s some steadfastness, 75% of respondents said their budgets are under “heavy scrutiny,” even if they’re not currently planning a reduction.
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