How pump price affects consumer spending – For a long time, I have not visited a beauty salon because of the Covid-19 safety restrictions. However, I decided to do that last weekend. I went to the popular highbrow beauty saloon ‘Glossy Hair and Spa’ located within Ikeja G.R.A, Lagos. After spending about three relaxing hours having a body massage, facials, hair colouring and cutting, I demanded for my bill and to my astonishment, I was handed a bill of N68, 000. “This is outrageous,” I thundered to the staff. “I’m sure there is a mistake. I could not have incurred up that amount. Previously I pay about N40, 000 for such services.”
The Manager, Mrs. Bel Dominic, hearing my raised voice came forward to explain that the Saloon has been running on generator since there was no electricity. “Madam we are sorry but you know that the price of fuel has increased.” “Is that why I should pay N68, 000? I still demanded, still very peeved. “No Madam but when you add the new cost of fuel to the amount we pay for the foreign products we use in our Saloon, you will appreciate why we charge that high. The price of forex is so high now, we hardly make profit now,” pleaded the Manager.
This is just one person’s experience. The recent increase in the pump price of fuel has adversely affected every sector of the economy. There is increase in the cost of transportation which has translated into increase in the cost of food products. Traders are charged higher for transportation of their products and they build this cost into their price of goods. So we are battling the increase in the price of fuel and also struggling with the ugly effects of Covid-19. The latest increase in fuel price took effect on August 5th, up from N143.50 per liter to N148.50 officially though some fuel stations in the hither lands sell higher.
Consumer spending is one of the main engines of economic growth, and its trajectory in the months ahead will be an important indicator of the Nigeria’s economic health. If the current trend continues, average daily spending could break through the bench mark on a routine basis, and thus denote a return to levels that characterised high spending far beyond consumer-earning. Growth in spending is constant, especially in Nigeria with its high ostentatious lifestyle.
Other attitudinal data shows that consumers are still more likely to spend more, while many continue to claim that spending less is the “new normal” in their lives, consequent upon evident meagre resources occasioned by Covid-19 pandemic. Speaking on this issue, a Consumer Advocate, Patrik Jato said, “to consumers, generally, the indications from prevalent economic environment, and especially with the ramblings about petroleum supply and retail-end pump price uncertainty, portends hopelessness; an experience that indicates disregard from among those trusted for public welfare-focused institutional system management. Panic level among consumers has been aggressively heightened to a dangerous level.”
Going down memory lane, Jato recalled that during the military era, petroleum pump price fluctuation was the norm, but that changed appreciatively when constitutional government replaced military governance. That change in political leadership brought hope of a better consumer-experience, based on petroleum products supply, distribution and pricing with all its over-riding influence on consumption pattern in general. “In an attempt to bring stability in the sector, the DPR team had few years ago monitored petrol stations as they dispensed products at official pump-price to the delight of consumers. However, there were reports of sealed stations, on account of pump-price manipulation,” he said.
On his part, a public affairs commentator, Ogundimu Akeem said; “recent happening in the country with regards to petroleum pump price is a reflection of man’s inhumanity to man, while would the handlers of the nation’s petroleum products allow consumers to be suffering from increase in the price of petroleum pump price at a time like this? he asked. In the view of analysts, the intervention of the Federal Competition and Consumer Protection Commission (FCCPC) is required in order to act in defence of consumers. So the most-assured first-step for us consumers is to report any form of consumer rights violation to the FCCPC, without exemption of any market segment or category. Consumers must know they have a ready protection in the FCCPC, as a start point, if nothing else.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Financial Watch. Every investment and trading move involves risk. You should conduct your own research when making a decision.