As the festive season unfolds, Nigerians are facing a gloomy yuletide ahead, with the country’s inflation reaching 28.20 percent in November, the highest since August 2005. The National Bureau of Statistics reports that this marks the eleventh consecutive increase in Nigeria’s inflation rate for the year 2023.
From January to November, the inflation rate surged by 6.68 percent, the fastest growth recorded since the recession in 2016. The impact is evident across various sectors, with food items, accommodation, clothing, electricity, education fees, and other prices skyrocketing.
A detailed analysis reveals that food inflation, which stood at 32.84 percent in October, is the primary driver behind the escalating headline inflation rate. Essential items such as a 50kg bag of rice have seen a substantial price hike, soaring from N38,000 to N55,000 since last December. Similarly, a 25-litre container of vegetable oil now costs N42,000, up from N32,000, and a chicken (layer) is priced at N6,000, compared to N3,000 the previous year.
The surge in prices extends beyond food, affecting transportation and other services, doubling costs nationwide. The removal of fuel subsidy and foreign exchange fluctuations are identified as contributing factors to this phenomenon.
President Bola Ahmed Tinubu’s introduction of twin policies, namely the removal of fuel subsidy and Naira floating in June, led to an increase in fuel prices exceeding N617 per liter and a surge in the forex rate to over N800/$1. Despite the intended gains of these policies, Nigerians continue to grapple with their adverse effects.
Out of the 15 million households targeted for the N25,000 cash transfer from the $400 million World Bank loan, only 1.5 million have received the Federal Government’s fuel subsidy palliative, underscoring the challenges faced in implementing relief measures.
Naira scarcity compounds the impact of rising inflation, despite assurances from the Central Bank of Nigeria (CBN) regarding cash sufficiency. Both Nigerians and point-of-sale operators have expressed concerns about the scarcity of banknotes.
Experts weigh in on the potential consequences of soaring inflation during the festive season. Professor Godwin Oyedokun from the Lead City University emphasizes that the rising inflation rate could significantly affect Nigerians’ ability to celebrate the Yuletide season, limiting their purchasing power and increasing financial strain.
Idakolo Gbolade, CEO of SD & D Capital Management, attributes the rising inflation to pressures on the Naira against the US Dollar, creating a chain reaction of inflationary trends. He predicts that the soaring inflation will add financial pressure on Nigerians, impacting their ability to enjoy the festive season.
Mazi Okechukwu Unegbu, a former president of the Chartered Institute of Bankers of Nigeria, warns that inflation might surpass 35 percent, expressing concerns about the impact of faulty policies and urging a focus on the core functions of the Central Bank.
Dr. Uju Ogunbunka, President of the Bank Customers’ Association of Nigeria, underscores the role of dependence on imported goods in fueling inflation and emphasizes the need for increased production within Nigeria.
In a pessimistic view, Prof. Segun Ajibola, the former President and Chairman of the Council of Chartered Institute of Bankers, suggests that monetary measures may not be sufficient to curb the inflationary pressure, highlighting the cost-induced nature affecting various sectors.
As Nigerians brace for a challenging yuletide, concerns are growing over the economic impact of rising inflation on the nation and its citizens.