The inflation rate in Nigeria has surged 24 times over the past 25 months, according to an analysis of Commodity Price Index reports by The SPRINGNEWS referencing data from the National Bureau of Statistics. The analysis, covering October 2021 to October 2023, revealed a consistent increase in inflation, with a brief slowdown in December 2022.
During this period, inflation rose from 15.99% to 27.33%. Investopedia defines inflation as a rise in prices, reflecting a decline in purchasing power over time. It is measured by the average price increase of a selected basket of goods and services over a specific period.
The impact of this inflation surge is evident in reduced purchasing power and increased costs of living for Nigerians. The article illustrates this with the example of a constant monthly salary of N100,000 and monthly expenses of N50,000 two years ago. With the current record-high prices of goods, more than 50% of the salary would now be spent on the same expenses, affecting monthly savings.
The National Bureau of Statistics reported in June that the continuous depreciation of the naira and persistent inflation eroded the N13.72 trillion that workers’ salaries gained in the last four years. Additionally, the World Bank’s Nigeria Development Update for June 2023 stated that accelerating inflation had pushed an additional four million Nigerians into poverty between January and May 2023.
The World Bank highlighted the loss of purchasing power due to high inflation, leading to increased poverty. This aligns with earlier statements from its lead economist in Nigeria, Alex Sienaert, who noted that rising inflation had significantly reduced the purchasing power of Nigerians, making the country’s consumer price inflation one of the highest globally.
Professor Sheriffdeen Tella, an economist at Olabisi Onabanjo University, emphasized the cyclic effect of persistent inflation. He explained that the continuous rise in inflation has led to a reduction in purchasing power, subsequently impacting production and causing job losses in the real sector of the economy.
Tella pointed out that the theoretical consequence of rising prices is a decline in the real cost of living. As prices increase, the purchasing power of money diminishes, resulting in higher costs of living and a reduced standard of living. This situation has not only dragged more Nigerians into poverty but has also led to a decline in production, with consumers prioritizing essential goods over non-essential items. Manufacturers have reported difficulties selling certain goods in this challenging economic environment.