Data released by National Bureau of Statistics (NBS) has shown that not only has inflationary pressure in Nigeria being raging for a while now; but it is also beginning to get out of hand. For it has reached an 8-month high of 16.8 percent in April. This is fueled mainly by fuel price hikes as well as accelerated food costs, most especially bread and cereals.
Food inflation rose to 18.37% in April compared to 17.2% in March. Attributable to increases in the prices of bread, cereals, food products, potatoes, yam, and other tubers, wine, fish, meat, and oils. For core inflation, it rose to 14.18% in April 2022 compared to 13.91% in March. The rise in the core is attributed to the increase in the prices of gas, liquid fuel, cleaning, repair and hire of clothing, clothing materials, other articles of clothing, and clothing accessories.
The war in Ukraine is partly to blame as it has caused global supply disruptions most especially pertaining to oil and wheat. Wheat price increased by over 68 percent year-on-year, according to the Financial Times. Shortages of aviation fuel have led to airlines increasing air fares by nearly 100 percent as the commodity rose from 190 to 700 naira ($0.46 to $1.69) per liter! Other factors responsible for inflation include insecurity, increased election spending, government borrowings as well as deficit spending.
Rising inflation has buffeted the Nigerian consumer by chipping away at a paltry purchasing power when over 40% of Nigerians live below the poverty line; what is more, a minimum wage of a measly #18,000 ($43). It has hampered economic growth; made Nigeria an unattractive destination for investments.
But, there are ways out. The macroeconomic authorities such as Nigeria’s Central Bank which has price stability as its overarching objective has clearly been missing in action. For it has failed to tighten its monetary benchmarks. Hence, it can increase interest rates to tackle inflation. The fiscal authorities too can help tame inflation.
Nigeria is basically experiencing stagflation. A scenario in which the two evils of high inflation and low growth/ high unemployment seem to be the order of the day. Government policies have exacerbated instead of ameliorating the situation.
