By Salami Abosede Opeyemi
Inflation, a persistent economic challenge, has been plaguing Nigeria, Africa’s most populous country.
The country’s inflation rate has been steadily rising, making it difficult for citizens to make ends meet.
This economic burden affects both the rich and the poor, with the poor struggling to afford basic commodities and the vulnerable unable to access essential necessities like food, water, and healthcare.
According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate rose from 33.20% to 33.69% between April 2024 and March 2024, indicating a significant increase in prices of goods and services.
The prices of essential items like rice, garri, tomato, beans, yam, and other food items have increased over the past year, with some prices more than doubling.
For instance, a 50kg bag of rice now costs between 85,000 to 90,000 naira, up from 30,000 naira in May 2023.
The International Monetary Fund (IMF) notes that as prices rise, the value of money decreases, making life harder and more miserable for many Nigerians.
The high inflation rate has reduced the purchasing power of citizens, forcing many to buy lesser quantities of consumables.
This has resulted in increased poverty levels, with many struggling to afford basic needs like food, water, and healthcare.
The causes of inflation in Nigeria, as identified by the CBN Journal of Applied Statistics (JAS), include monetary factors, exchange rate factors, fiscal factors, supply-side factors, inflation persistence, and infrastructure and dependency on imported goods problems.
To address the issue of inflation, the Joint Economic Committee and financial experts recommend the following solutions:
1. Macroeconomic stability
2. Inclusive growth
3. Job creation
4. Protecting poor households
5. Access to financing and exchange rate reform
6. Monetary and trade policy
7. Fiscal policy
How Inflation is Affecting Nigerians
Inflation is having a devastating impact on Nigerians, making it difficult for them to afford basic necessities. Some examples of how inflation is affecting Nigerians include:
– Increased transportation costs: With fuel prices skyrocketing, transportation costs have increased, making it difficult for people to commute to work, school, and other essential destinations.
– Higher prices for housing and rent: As inflation rises, landlords are increasing rent, making it difficult for tenants to afford decent housing.
– Reduced purchasing power for fixed income earners: With prices increasing faster than salaries, fixed income earners are finding it difficult to make ends meet.
– Impact on small businesses and entrepreneurs: Inflation is making it difficult for small businesses to operate, as they struggle to afford raw materials, equipment, and other necessary expenses.
Causes of Inflation in Nigeria
The causes of inflation in Nigeria are complex and multifaceted. Some of the key factors contributing to inflation include:
– Monetary policy decisions: The Central Bank of Nigeria’s decision to increase interest rates has led to a reduction in money supply, causing prices to rise.
– Exchange rate fluctuations: The devaluation of the naira has led to higher import costs, affecting prices of goods and services.
– Fiscal policy decisions: The government’s decision to increase taxes and tariffs has led to higher production costs, causing prices to rise.
– Supply chain disruptions: Disruptions in supply chains, such as the COVID-19 pandemic, have led to shortages and price increases.
– External factors: Global economic trends, such as the rise in oil prices, are also contributing to inflation in Nigeria.
In conclusion, inflation remains a significant threat to Nigeria’s economic stability and the welfare of its citizens.
As prices continue to rise, the value of money dwindles, and the purchasing power of Nigerians is eroded.
It is essential for stakeholders to work together to implement sound economic policies and reforms to overcome the challenges of inflation and build a brighter future for Nigeria.
