How inflation has pushed more Nigerians below poverty line in five years
On August 15, 2023, the National Bureau of Statistics (NBS) announced that Nigeria’s inflation rate had risen to 24.08% from 22.78% the previous month.
Inflation, often referred to as the silent thief, is a persistent and gradual rise in the general price level of goods and services in an economy.
The removal of fuel subsidies and the unification of the naira has resulted in a high cost of living, as transportation costs, which are major drivers of an economy, continue to increase.
In the new report, food inflation increased by 1.7 percent on a month-on-month basis, rising from 26.98 percent in July 2023 to 25.25 percent in June 2023.
While moderate inflation is considered a normal feature of a healthy economy, its effects can be insidious, especially when it comes to eroding the purchasing power of citizens.
With a minimum wage of ₦30,000 per month introduced in 2019, inflation in the country, where 133 million people are multi-dimensionally poor, has surged by an alarming 12.68%, within the last five years, pushing more people below the poverty line of $1.9 per day.
Here’s how inflation increased from 2019 to 2023
Nigeria inflation rate for 2019 = 11.40%.
Nigeria inflation rate for 2020 = 13.25%.
Nigeria inflation rate for 2021 = 16.95%.
Nigeria inflation rate for 2022 = 18.85%.
Nigeria inflation rate for July 2023 = 24.08%
To put this in perspective, a cleaner earning ₦30,000 at a Nigerian restaurant, whose salary has not been increased for five years, would have lost ₦3,804 of their monthly income to inflation. This means that, although they earn the same amount of money as they did in 2019, inflation would have eroded their purchasing power. Similarly, a business owner who made ₦500,000 monthly five years ago now earns ₦63,500 less.
Inflation, as the data below from NBS shows, affects different goods and services at varying rates, leading to changes in everyday expenses.
Food insecurity is a major problem in Nigeria. According to the NBS, Nigerian households spend 56.65% of their income on food. For a Nigerian earning the minimum wage of ₦30,000, they spend ₦17,000 on food alone. This raises the question: how will ₦13,000 cover their housing, clothing, transportation, education, healthcare, and other basic needs?
Families across the nation face an uphill battle to make ends meet, grappling with the harsh realities of rising inflation, increased costs of goods and services, and diminishing purchasing power. The removal of fuel subsidies, in particular, has led to a surge in transportation costs, affecting the daily lives of millions who rely on affordable public transport.
