How Nigeria’s 27-Year High Inflation Is Driving Millions Of Nigerians Into Poverty
As Africa’s biggest economy continues to contend with the fallout of subsidy removal, amidst a weakened naira after the exchange rate unification, inflation has climbed to a 27-year high, reportedly pushing more Nigerians below the poverty threshold.
Just a year ago, in December 2022, headline inflation was 21.34 percent, but it has increased significantly by 7.58 percent to 28.92 percent in December 2023, according to the newly released consumer report by the National Bureau of Statistics (NBS).
Nigeria’s soaring inflation rate has been linked to some economic policies introduced by President Bola Tinubu in less than a year of his administration. During his inauguration, Tinubu announced the removal of fuel subsidy, and a month later, abolished the multiple exchange rate. These policies has affected the economy of Africa’s most populous nation, with a direct impact on the hike not only in transportation but also in the cost of food.
Data from the NBS shows that prices for Premium Motor Spirit (Petrol) increased by 225.85 percent from 206.19 in December 2022 to December 2023, reaching N671.86. On food, Nigerians grapple with the constant increase in the cost of food.
In a country where at least 40 percent of its population of 200 million lives in extreme poverty, food inflation, which increased from 32.84 to nearly 34 within a month, is driving more people below the poverty line of $1.9. According to the World Bank in June 2023, inflation drove more than four million Nigerians into poverty. This was a time when inflation was around 22.4 percent.
The continuous increase in commodity prices is putting many Nigerians on the edge, with many of them spending over 90 percent of their income on food alone, according to a 2023 report.
Prices from Neusroom price checks at various supermarkets in Lagos, the nation’s economic hub, showed that for the months ending in December, a loaf of bread hovers around N950 to N1050, a significant increase of 43 percent compared to N700 in 2022.
Speaking on the impact, Damilare Akanni, a financial expert, explained that the recent increase in inflation that the country is witnessing, aided by the removal of fuel subsidies, has the most devastating effect on ordinary masses.
“It is the common man that will bear the brunt of inflation. What inflation does is reduce the purchasing power of the income you have. So, in layman’s terms, the increase in inflation means that what your money could buy yesterday, it cannot afford to buy it again,” Akanni said.
With over 80 million Nigerians living in extreme poverty, entrenched inflation, caused by recent policies and ravaging insecurity, is driving more people into poverty.
“It is not surprising that many Nigerians are now soliciting financial assistance as many households cannot afford to keep up with the rising cost of goods,” Akanni said.
