Nigeria’s untamed rising inflation under the government of President Bola Ahmed Tinubu in the last nine months has worsened the citizens’ misery.
Friday last week, the National Bureau of Statistics Consumers’ price index and inflation report showed that Nigeria’s headline inflation rose to 31.7 per cent and food inflation jumped to 37.95 per cent.
CPI measures the average change in the prices of food and services consumed by people in daily living.
With headline and food inflation skyrocketing to 31.7 per cent and 37.95 per cent, respectively, it showed that most Nigerians’ living cost and misery index had worsened.
A further Year-on-year analysis showed that headline inflation rose by 9.79 per cent compared to the 21.91 per cent recorded in February 2023.
Also, food inflation rose by a whopping 13.57 per cent compared to 24.45 per cent recorded in February 2023.
Similarly, from June 2023 to February 2024, under President Tinubu, Nigeria’s inflation has soared further by 8.91 per cent, caused by fuel subsidy removal and Naira floating at the foreign exchange market.
The untamed rise indicates that more citizens are finding it difficult to afford food, clothing, health care, energy, shelter, transport, Communications, education and other basic needs.
The inability of citizens to access basic needs is a problem in Urban and Rural sentiments in Nigeria.
According to CPI, urban inflation stood at 33.66 per cent, while rural Inflation was 29.99 per cent. Either way, Nigerians in Abuja, Lagos, or a village in Gombe state are experiencing heightened hardship caused by inflation.
The development of Nigeria’s misery index rose to 75 per cent in March 2024 from 55.2 per cent in February last year.
The misery index is a measure of economic distress felt by everyday people.
However, though the 2023 misery index is yet to be released, the feelings on the streets of Nigeria showed that Nigerians are poorer.
Indeed, the current poverty rate in Nigeria exceeds the 133 million quoted by the NBS Multidimensional Poverty Index (MPI) for 2022.
The recent move by the Central Bank of Nigeria to raise the interest rate by 400 basis points to 22.75 per cent and previous monetary measures are yet to address the country’s inflation.
The statement made barely five days ago by the Minister of Finance, Olawale Edun, that Nigeria is constrained by revenue to fund critical infrastructures and citizens’ welfare further paints a glimmer of hope.
Consequently, uncertainties have trailed the implementation of the 2024 N28.7 trillion national budget.
Speaking exclusively with DAILY POST on Monday, a renowned economist, former President, and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola, said Nigeria’s heavy reliance on imports has further worsened its inflation.
He noted that the untamed inflation in the country worsened the misery index and that Nigerians were feeling the pain.
Prof Ajibola contended that Nigeria’s inflation is not induced by excess liquidity.
He said that controlling the cost of energy (by making refineries work) and other infrastructures, improving the value of the Naira, and tackling the problems of insecurity, especially those limiting food production, are the solutions.
“Inflation is a monster to tame. Whenever it debuts, it turns itself into an elephant in the room. It will take everything within the arsenals of such an economy to uproot it.
“The case of Nigeria is quite challenging because the economy is vulnerable to the outside world. Nigeria is one country that imports all sorts of consumer durables and non-durables.
“Basic raw materials, spares and accessories are imported. Likewise, necessities such as food, medicine, etc are imported.
“Accordingly, the domestic economy is susceptible to imported inflation. In the same vein, the recent devaluation in the value of the Naira has pushed up the landing cost of these items, thereby increasing the local prices of consumables and the cost of producing those manufactured locally. This cost-push inflation has been ravaging the domestic economy for a while now.
“Inflation worsens the misery index. Nobody gains from its impact. It leaves all the parties in its trails devastated. Nigerians are feeling the pain.
“Government finances are challenged because of cost overruns. Planning at micro and macro levels is dislocated. The real value of money, hence the purchasing power of income earners, is constricted. The Naira is losing its primary function as a store of value.
“Economic sabotage through dollarisation of the domestic economy poses serious challenges to authorities and security operatives.
“I am not convinced that the Nigerian situation is induced by excess liquidity. If banks are awash with liquidity, why did they borrow N7 trillion from CBN in January and February this year? And for the cash component, how many can walk to their banks today and withdraw cash seamlessly?
“There is a need for a holistic approach to taming inflation: control cost of energy (let the local refineries work) and other infrastructures, improve the value of the Naira, tackle problems of insecurity, especially those limiting food production.
“Let Nigerians change their orientation away from the propensity to consume imported items and embrace local counterparts”, he told DAILY POST.
Similarly, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, said the continued inflation rise in Nigeria had shown that increasing interest rates alone would not address the challenge.
He lamented that the country’s skyrocketing prices of goods and services had badly affected Nigerians’ purchasing power.
According to him, Tinubu’s administration should intensify welfare programmes for indigent Nigerians in the short term and implement agricultural policies to boost food production as a long-term solution.
“The rise in inflation to 31.70 per cent in February has shown that increasing MPR alone will not stem inflation.
“The other major factors affecting the inflationary trend are persisting. The food inflation rate is higher, and the fluctuating value of the Naira coupled with dwindling economic activities has given rise to the high cost of goods and services, which will also impact inflation.
“The high-interest rate occasioned by an increase in MPR is also helping the manufacturing sector increase productivity.
“The resultant effect of rising inflation is reduced purchasing power and a struggling economy.
“The government should intensify its welfare program to the needy poor to alleviate the increased hardship and pains, but in the long run, the government needs to immediately implement its agricultural policies and boost the private sector with loan schemes to rejuvenate the economy and prevent further unemployment.
“Increased economic activities and strengthening of the Naira will lead to a gradual reduction in inflationary trend in the long run”, he said.
Prof Godwin Oyedokun, a don at Lead City University in Ibadan, said he does not see Nigeria’s inflation rate falling because there were no parameters to show that things were getting any better for Nigerians.
“The issue of inflation has become more problematic in Nigeria. This means the value of whatever we have has been eroded to 31.71 per cent. I don’t see it coming down soon because parameters showing that things will be fine are unavailable.
“The rise in inflation may not be because of the emergence of President Bola Tinubu’s government but due to decades of decay witnessed over time.
“CBN and others are doing their best, but the impact has yet to be felt. It may come in the long run. Meanwhile, I believe some people are sabotaging the economy.
“I don’t want to subscribe to palliative economics, but anything to give succour to Nigerians will be appreciated.
“The government should continue its welfare support to Nigeria and ensure those in other sectors of the economy are not sabotaged”, he said.
The Director General of the Centre for the Promotion of Private Enterprise, Muda Yusuf said purchasing power for Nigerians had continued to slump over the past few months due to rising inflation.
“Persistent inflationary pressures in the Nigerian economy continue to be troubling, especially because of the acceleration effect on poverty and deterioration of citizens’ welfare. Purchasing power had continued to slump over the past few months.
“Economic growth may remain subdued while the risk of stagflation heightens.
“Regrettably, the major inflation drivers are not receding; if anything, they have become even more intense”, he said.
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