…inflation rate at 22.41 percent is the highest in about 17 years
…food inflation is highest with more than 50%
The National Bureau of Statistics (NBS), has said Nigeria has been having double digit inflation since February 2016 at 11.38 percent.
Inflation, which serves as a measure of consumer prices, has more than doubled over the last eight years, worsening the living conditions of cash strapped consumers in Africa’s biggest economy.
And since then, it remained in double-digit territory at 22.41 percent in May 2023, one of the highest in the world. Before inflation accelerated to the painful double digit, it was previously in that territory in December 2012 (12 percent).
“When Buhari assumed office at the end of May 2015, annual inflation averaged 9.01 percent. By the end of his first full year in office, it had surged to 15.68 percent,” said Ikemesit Effiong, head of research at SBM Intelligence.
“Except for slight dips in 2018 and 2019, inflation has always risen under the current administration,” he said.
He stated that globally COVID-19 and renewed geopolitical competition created a cost of living crisis.
“For Nigerians, who have had to navigate soaring insecurity, border closures, a yawning infrastructure gap, currency volatility, hollowed out domestic manufacturing and the unsustainable seasonality of food produce to name a few, the Buhari years have been a long cost of living emergency,” he said.
Chinyere Almona, director-general of Lagos state Chamber of Commerce and Industry, LCCI added that the inflation rate at 22.41 percent is the highest in about 17 years, with significant and worrisome impacts on both the household and business sectors.
“Apart from eroding purchasing power, it has led to inventory stockpiles. If left unchecked, the high inflation may further constrain production, lead to a steeper rise in poverty figures, frustrate economic growth, and lead to higher unemployment and non-competitive exports, especially in the sub-region,” she said.
Incomes which have declined to $2, o65.7 in 2021 from $2,679.6 in 2015, a data from the World Bank show and a continuous spike in prices are reducing the ability of Nigerians to afford some of the basic necessities of life such as food, water, shelter, and clothing.
All these have contributed to an increase in poor people to 95 million in 2022 from 70 million in 2016, according to the World Bank.
“The minimum wage which was $82 in 2019, had dropped to $26. Consumer price inflation had heightened, making it one of the highest in the world,” it said in its latest Nigeria Development Update report.
Last year, the NBS put the number of Nigerians living in multidimensional poverty at 133 million, compared to 82.9 million considered poor in 2019 by national standards.
When people cannot meet basic necessities of life, they will resort to social vices such as kidnapping, which is now a new business in Nigeria, Damilare Asimiyu, a senior analyst at Afrinvest Securities Limited, said.
In no particular other, here are the nine areas:
The country’s surging inflation has made staple food (everyday meals) to become less accessible and unaffordable for people especially at the lower income levels.
Analysis of the NBS’s selected food prices report across the 36 states in the country show that the average price for one kilogram (kg) of yam tuber rose by 298.4 percent to N444.6 in April 2023 from N111.6 in January 2016, one kg of rice imported loose rose by 274.3 percent to N781.5 from N208.8 and one kg of garri white sold loose grew by 207.5 percent to N362.5.
A piece of egg rose by 198 percent to N88.2 percent, one bottle of evaporated canned milk increased by 187.6 percent to N378.8, one kg of beans sold loose grew by 158.7 percent to N615.7, one kilogram of frozen chicken rose by 155.5 to N2,853.2 and a 500g sliced bread rose by 138.9 percent to N577.4.
Food inflation, which constitutes more than 50 percent of the headline inflation has more than doubled from 9.78 percent in May 2015 to 24.82 percent in May 2023.
The higher inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly through higher prices of local staples- rice, bread, yam, and wheat, especially in non-rural areas, according to the World Bank.
As inflation cuts down on real wages, a growing number of people are now opting for second-hand items, clothes that have been previously owned, as alternatives to new clothes.
Bimbo Adelabi, a single mother and civil servant, told BusinessDay that second-hand items are cheaper alternatives for a lot of struggling Nigerians.
“Everything is expensive in Nigeria now, especially food. With food, there are no alternatives, but for clothes, I can buy second-hand items that are of quality,” she said.
“This is why markets like Yaba, Asuwani, and Katangua will keep thriving. They afford the average Nigerian’s clothes and other second-hand items,” Adelabi said.
Thrift clothes are now sold between N1,500-N5,000 per piece. “Who will give you trousers for N1,500,” Ejima asks, saying, “That was the price like four years ago, now it is N4,000,” indicating a 100-percent increase.
House rent, mostly in the mainland areas of Lagos where the middle- and low-income earners reside, has gone up by more than 100 percent in almost eight years.
The average price of two bedroom flats for rent in Ikeja, Surulere, Ilupeju and Gbagada ranges from N1.5 million naira – N2 million per annum from N350, 000- N500, 000. A three bedroom flat for rent which was sold around N600, 000- N700, 000 is now N 3.o million- N3.5 million.
Just like second hand clothes, the high cost of foreign exchange, which was N192/$ in 2015 to N460.6/$ at current official rate, has reduced the ability of most middle-class Nigerians to buy brand new cars, making them go for cheaper used ones (often called Tokunbo).
But even at that, the prices of used cars have increased significantly due to scarcity of salvaged cars and the increased cost of shipping due to the COVID-19 disruptions.
The price of a foreign used Volkwagen Glof which used to be N400, 000-N450,000 in 2015/16 is now N2.4 million- N2.6 million and a foreign used Toyota Camry is now sold for N3.5 million to N3.7 million from N750,000-N850,000.
Food and transportation take about 65 percent of a person’s income. But with average retail petrol prices up to N238.1 per litre in May 2023 from N118.4 in May 2015, transport cost has eaten deeper into the pockets of people.
According to the NBS, Nigeria’s total transport expenditure had increased by 214 percent to N2.59 trillion in 2019/2020 from N823.24 billion in 2009.
The average fare paid by commuters for bus journeys within the city per drop increased by 334.1 percent to N648.2 in March 2023 from N149.3 in December 2016.
In air travel, the average fare paid by air passengers for specified routes single journey rose by 143.1 percent to N74, 755.4 in March 2023 from N30, 747.71 in December 2016.
Health services and drugs
Most of the equipment and drugs used in Nigerian hospitals are imported, making the cost of providing healthcare services expensive. For example, Panadol used to sell for as low as N60 but now costs N150 and Amatem Forte, a malaria drug is sold for N2, 000 from N900.
Education, considered a human right and meant to be affordable, is fast getting out of reach for people due to the increase in school fees.
It was cheaper to pay school fees then than now. Then in 2015, the cost of school fees in a public university was around N15, 000-N20, 000, but today, it has doubled to around N40, 000-N50, 000.
For private universities, the cost is on average, more than 10 times what it would cost in public schools. For primary and secondary schools, most charge more tuition than would be paid for university education.
The current socio-economic indicators such as elevated poverty levels, rising inflation, high unemployment, low incomes and weak purchasing power are affecting people’s ability to save.
A recent World Bank’s Global Findex Database shows the percentage of the adult population (15 years and above) who saved at a financial institution reduced to 17.7 percent in 2021, the lowest in 10 years, from 23.6 percent in 2011.
When compared with other sub-Saharan African countries, Nigeria’s 17.7 percent is lower than South Africa (37.2 percent), Namibia (33.7 percent), Mauritius (28.9 percent), Kenya (21.5 percent) and Ghana (21.1 percent).
Edet Akpan, a young man in his early 30s, said his level of savings compared to 2015 has reduced. “I am still saving but not as massive as pre-2015 levels because of the level of inflation, currency devaluation and the financial support I give to my family, friends and colleagues who have been adversely affected by the economic crisis,” Akpan said.
Low and stagnant minimum wage
In Nigeria, the minimum cost of living is above the minimum wage due to high inflation rates, according to Picodi.com, an e-commerce platform.
“The minimum cost of healthy living for an adult per month at the beginning of 2022 stood at N40, 980 in Nigeria,” it said.
The country’s monthly minimum wage for federal workers has been stagnant since 2019 at N30, 000 from N18, 000.
Felix Ashakah, economics lecturer at Western Delta University, Oghara, said Nigeria’s minimum wage is less than the minimum cost of healthy living by 36.60 percent. “The difference indicates that many Nigerians are malnourished and poor.”
He added that the high prices of food items have eroded the income of the people. “The salaries of many workers have not increased to match increases in prices. Many individuals and families need financial help to augment their meagre income.”
The real value of the national minimum wage, currently set at N30,000, has dropped by 40 percent and is lower than when it was reviewed up from N18,000 by Aso Rock in 2019, according to Effiong of SBM.Follow us on social media