What You Should Know About Nigeria’s Inflation And How It’s Affecting You
For the 16th consecutive month, inflation in Nigeria, Africa’s most populous nation, has increased , despite various efforts by the government to mitigate the rising cost of living.
According to the latest data released by Nigeria’s National Bureau of Statistics (NBS), inflation in April 2024 increased to 33.69 percent from 33.2 percent recorded in March.
There have been efforts by the government to slow down the soaring inflation. Within two months, Yemi Cardoso’s led Central Bank of Nigeria (CBN) increased the interest rate from 18.75 percent to 24.75 percent.
While these efforts have not yielded the intended result, the major driver of April’s inflation is an increase in the electricity tariff in many urban cities across the country. The government in April hiked energy prices to ₦225 (15 US cents) per kilowatt hour from ₦68 before reducing it by 8 percent.
Nigeria is equally recording a steady rise in food inflation, which increased by nearly 16 percent on a year-on-year basis, eroding the purchasing power of citizens and driving millions below the poverty line. At 40.53 percent, food inflation was highest in some of Nigeria’s staple foods, from garri, bread, yam, to beef and fish.
With Nigeria’s minimum wage – one of the lowest in Africa – remaining the same over five years, soaring food prices are having far-reaching consequences on the lives of Nigerians. While the World Food Programme projected that at least 26 million Nigerians will face acute food hunger between June and August 2024, a recent report by Cadre Harmonise put the figure at 31.5 million.
Inflation erodes the value of money, making consumers buy fewer goods and services with the same amount of income. This reduction in purchasing power can lead to a decline in the standard of living, especially for those on fixed incomes or low wages.
Damilare Akanni, a financial expert, explained that the recent increase in inflation that the country is witnessing has the most devastating effect on ordinary masses.
“It is the common man that will bear the brunt of inflation. What inflation does is reduce the purchasing power of the income you have. So, in layman’s terms, the increase in inflation means that what your money could buy yesterday, it cannot afford to buy again,” Akanni said.
While 2023 data compiled by Picodi, an international e-commerce organisation, showed that the average Nigerian spends nearly 59 percent of their income on food, Neusroom research shows that the price of most widely consumed food in the country has more than doubled.
According to Price of Watch for the month of March by NBS, 1kg of local rice, the major ingredient used in making Jollof rice, increased by 152 percent from ₦530 in March 2023 to ₦1,340 in March 2024. Also, 1kg of Brown Beans sold at ₦596 a year ago is now sold at more than double the price. A year ago, Nigerians bought one loaf of bread at ₦561, which now sells at ₦1,109.
“Inflation basically means the rise in the prices of goods and services. And who are the consumers of goods and services? Of course, the households,” Akanni said. “So, it is not surprising that many Nigerians are now soliciting financial assistance as many households cannot afford to keep up with the rising cost of goods,” Akanni said.
