Inflation: Consumer Credit Hits N4.4tn in November – CBN
Nigeria’s consumer credit outstanding rose significantly by 26.29 per cent to N4.42tn in November 2024, up from the preceding month’s figure of N3.5tn, an analysis of data from the Monthly Economic Report of the Central Bank of Nigeria showed on Monday.
Consumer credit outstanding is the total amount of debt people owe from using credit to buy things. It shows how much people are spending, how much debt they have, and how the credit market is doing.
The increase was largely attributed to inflation expectations, as more Nigerians turned to credit to manage rising living costs.
The CBN report revealed that personal loans experienced the most significant growth, soaring by 37.76 per cent to N3.32tn from N2.41tn recorded at the end of October 2024.
This category of loans, primarily used for household expenditures, accounted for 74.95 per cent of the total consumer credit.
In a similar vein, retail loan credit issued for the purchase of goods and services saw a modest increase of 1.83 per cent, rising to N1.11tn from N1.09tn in the previous month.
These loans made up the remaining 25.05 per cent of total consumer credit.
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“Consumer credit outstanding increased significantly by 26.29 per cent to N4.42tn from the level in the preceding month, due, largely, to inflation expectations. Personal loans grew by 37.76 per cent to N3.32tn, from N2.41tn at end-October 2024.
“Similarly, retail loans increased by 1.83 per cent to N1.11tn from N1.09tn in the preceding month. Personal loans accounted for 74.95 per cent of total consumer credit, while retail loans constituted the balance,” the report read.
The rise in consumer credit aligns with the CBN’s ongoing efforts to enhance financial inclusion and credit accessibility.
However, concerns about rising debt levels and repayment sustainability persist, especially as interest rates remain high.
The sharp rise in personal loans comes at a time when the CBN, under Governor Olayemi Cardoso, has implemented multiple interest rate hikes in an effort to curb inflation.
The Monetary Policy Rate has been raised by a total of 875 basis points in 2024, moving from 18.75 per cent at the start of the year to 27.50 per cent by November.
This aggressive monetary tightening stabilises the economy by reducing excess liquidity.
Cardoso has acknowledged the pressure that high interest rates place on households and businesses but insists that the measures are necessary to contain inflation.
Economic experts have urged the central bank to implement measures to balance credit expansion with financial stability, ensuring that increased borrowing does not lead to higher default rates.
