Adejoke Oladele, a Lagos resident and a regular at the popular Mile 12 food market was alarmed on Saturday when a basket of tomatoes she bought at N3,000 a fortnight ago, has shot up to N5,000.
Omorodion Esther, a school teacher in the Ishaga area of Lagos also bought a sachet of spaghetti for N300 two weeks ago. By last Friday however, the price of the same item has shot up to between N420 and N450. The big bottle of Palm oil that she bought for N850 then now goes for N1,100 while a four-litre can of groundnut oil has moved from N8,500 to N9,400 within two weeks.
The experience of both Adejoke and Esther is representative of what inflation has done to Nigerians across the 36 States of the federation.
Statista, a German Database firm with a speciality in the market and consumer data forecasted Nigeria’s inflation to peak at 16.1 per cent in 2022. By April however, inflation in Nigeria has surpassed the projection, shooting up to 16.82 per cent, 0.72 per cent above Statista’s forecast.
As to the last figure declared by the NBS, the nation’s statistics agency, inflation has climbed to 18.60 per cent.
Although inflation is currently a global issue, Nigeria’s experience in the first half of the Year 2022 is however worrisome, climbing month on month and indicative of a close to recession.
In January, inflation peaked at 15.60 per cent, it shot up to 15.70 per cent in February and, 15.92 per cent in March. By April, it has risen to 16.82 per cent, 17.71 per cent in May and 18.60 per cent in June.
A check across Africa shows Nigeria’s June inflation figure is the eighth highest on the continent, better than only seven countries. Malawi’s inflation figure is 19.1 per cent, Sierra Leone’s is 22.44 per cent and Angola’s is 22.96 per cent.
Ghana has shot up to 29.8 per cent, Ethiopia is 34 per cent, and Zimbabwe and Sudan are on the same level of 192 per cent.
45 countries’ inflation is below Nigeria, ranging from South Sudan which is -4.29 per cent to Burundi whose inflation rate stands at 17.57 per cent. Tunisia is 8.1 per cent while South Africa which is always compared to Nigeria has its inflation at 6.5 per cent.
Nigerians are now in fear that the economy might have entered its worst route in five years, going by the latest 18.60 per cent rate.
The latest Consumer Price Index (CPI) report shows that the inflation rate jumped to 18.6 per cent on a year-on-year (y/y) basis in June from 17.71 per cent in May, hitting a five-year high when the inflation peaked at 18.72 per cent in January 2017. Food and core inflation also throttled to 20.60 per cent and 15.75 per cent
Food prices hit the rooftop beyond what an average Nigerian can afford as incomes remain stagnant, salaries are being slashed, delayed and not paid as when due, and the minimum wage is stuck at N30,000. The increasing cost of diesel, fuel and cooking gas has even added to the hardship Nigerians now face.
Recent reports show that the number of poor people in Nigeria is to hit 95.1 million in 2022 from 89 million in 2020 (World Bank); the unemployment rate has worsened to 33 per cent (NBS); the country barely produces exports except for crude petroleum products which account for about 92 per cent of the country’s exports.
But, the Russia-Ukraine war, theft, vandalism, and subsidy payment, among other factors are hampering the proceeds from the crude oil. This is even as all the real sectors ranging from the education sector to housing, manufacturing, to agriculture are seen painting negative pictures of growth.
The economic quagmire, no doubt, may push the Central Bank of Nigeria (CBN) to take some drastic decisions at its two-day Monetary Policy Committee (MPC) meeting which commences today, Monday, July 18, to address the current economic woes.
Ikechi Agbugba, a senior lecturer at the Department of Agriculture and Applied Economics, Rivers State University, said the current inflation figure is a clear indication that the Nigerian economy is stretching progressively towards recession if the appropriate measures are not taken.
The several issues of inflation which have recorded a significant impact on the Nigerian economy and by extension on the masses would be consequential on several factors.
It will result in an increasing level of poverty as there is bound to be an increase in the food index which will, in turn, lead to a hike in the prices of food and essential items that would either lead to little or no rise in income for the masses.
It will also increase the level of profits and margins earned by traders, farmers and businesses as they are bound to sell the products they purchased at lower prices for higher prices, and result in widening the existing inequality, making the rich richer while the poor become poorer.
It will render the economic environment unstable as it will impact foreign direct investment (FDI) and exchange rates for industries that rely on foreign raw materials to produce, Agbugba explained.
“I foresee Nigeria’s economic potential being constrained by many structural issues, and include: inadequate infrastructure, bottlenecks to investment, tariff and non-tariff trade barriers, limited foreign exchange capacity and lack of confidence in currency valuation,” he said.
The don urged the government and other stakeholders of economic transformation to engage in lowering the interest rates while jump-starting spending as this would invariably reduce the cost of borrowing and increase consumer spending and investment as well as counter inflation by reducing the money flow thereby forcing loan rates higher to slow spending.
He also suggested that the government increase real wages, noting that if nominal wages grow above inflation, consumers will have more disposable income to spend and focus on higher global growth which could lead to increased export spending.
“More so, it is high time that Nigeria’s government engages in investing in infrastructure, strengthening land tenure security, improving educational outcomes, liberalising the trade regime and enhancing trade and transport facilitation to help develop value, as well as facilitating the efficient reallocation of production resources.
“To build a modern and inclusive economy, policymakers in Nigeria must begin to focus on economic transformation, moving workers from low-productivity sectors like the agriculture sector to higher-productivity areas like industry and service sectors, as well as increasing productivity growth within sectors.”
Traders, Teachers, Others Lament Inflation Hike
Adejoke Oladele, a businesswoman at Abule Egba, Lagos, said she did not think the inflation rate declared by NBS was even true.
“I expected it to be higher than the current figure. Everything is on the increase including transportation fares which have now added to the cost of goods”.
She said, ” Yesterday I went to Yaba from Iyana Ipaja, you won’t believe it was N800 as against N600 the previous day. I don’t know how we got here.
“I now advise people to hold double of their usual money when going to the market because prices are changing every day”.
On her part, Omorodion Esther, a school teacher in the Ishaga area of Lagos, said, “I can’t point out anything that its price has not increased in the market. It’s now a normal thing in Lagos and the whole of Nigeria in addition to the normal foodstuff increase like rice, beans and the rest.
“The painful part is the transfer of aggression from others. My children’s school just increases their fees by voting to increase the prices of everything. I used to pay N35,000 per term for my boys in a private primary school but after their exams last week, they came home with a notice that the school fees would go up from September. The fee would now be N45,000 per term. But I am seriously considering pulling them out because I can’t afford that fee right now.
Glory Odum, who deals in fashion accessories based in the Agege area of Lagos, also expressed her displeasure with the surging prices of goods and services. Salonist and barbers have yanked up their prices. Clothes are now very expensive. Buying new clothes now is a luxury. To do pedicures and manicures is also expensive. In my area, it used to be N500 but is now N750.
“Even prices have gone up at Barber’s Shop from N500 to N750. I mean this is just to have a haircut not dying and another artificial add-on.
She wondered what efforts the government is making to address the issue, and lamented that the government seems not bothered at all.
“I can’t wait for this government to go and let’s have a new administration and see if things will be better.”
Elizabeth Kole, a fashion designer who also sells perfume, said, “Inflation has affected my design job so much, especially the prices of materials which have increased in the market.
“Sometimes, after charging customers for a job, you’ll end up blaming yourself because it leaves no gain for you”.
Kole added, “Two months ago, I took N50,000 to buy some perfumes which I sold out in two weeks. I went back to the market and I could not get those perfumes for the same price again. The money I budgeted for 10 perfumes I ended up using to buy seven.
Current economic situation is a result of the fall in demand and price of crude oil, the balance of payments deficit it, adoption of a floating exchange rate regime, an increase in the pump price of PMS, activities of pipeline vandals, irregular power supply, withdrawal of black money from circulation among other which hcombinedbine to create a cost-combinedflation, fa in aggregate demand and a fall in output of goods and services, Agbugba highlighted.
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