Nigeria’s inflation rose from 19.6% in July by 0.92 basis points to 20.52% in August, the highest in 17 years, according to the latest report from Nigeria’s Bureau of Statistics (NBS).
The new inflation rate represents the seventh consecutive monthly rise in Headline inflation since February. Food inflation also hit a record 23.12% rise in August 2022, representing a 1.1 percentage point increase compared to 22.02% recorded in the previous month.
“In August 2022, on a year-on-year basis, the headline inflation rate was 20.52%. This was 3.52 percentage points higher compared to the rate recorded in August 2021, which was 17.01%.
“This shows that the headline inflation rate increased in the month of August 2022 when compared to the same month in the preceding year (August 2021). On a month-on-month basis, the Headline inflation rate in August 2022 was 1.77%, this was 0.05% lower than the (1.82%) rate recorded in July 2022”
According to the NBS’ report, “the food inflation rate in August 2022 was 23.12 percent on a year-on-year basis; which was 2.82 percent higher compared to the (20.3%) rate recorded in August 2021.”
These figures mean that Nigerians are about to experience further economic hardship due to the widened disparity it will create between earnings and the cost of living.
Nigerians spend more than 50% of their meager earnings on food alone, leaving them with about 40% to cater for other needs. With Nigeria’s median income at about N11.500 per month, the economic affliction is set to be excruciating.
Experts blame government, proffer solution
Experts who weighed in on the country’s current economic situation have pointed at many things, ranging from forex scarcity to Russia-Ukraine war to poor economic policies, as reasons for the negative economic trajectory.
Analyst and CEO, Wyoming Capital and Partners, Tajudeen Olayinka, told Vanguard that 20.52% inflation number for the month of August 2022, is an indication that demand-side management tools being deployed by CBN to tame inflation in Nigeria may actually be aggravating the situation, given the fact that most of the factors responsible for inflation in Nigeria are traceable to the supply side of the economy.
“These supply side factors had been there and largely unresolved before the emergence of imported inflation that came as a result of the Russian war on Ukraine.
“Foreign exchange scarcity and exchange rate mismanagement; unending insecurity and limited access to farms; crude oil theft and inability to meet OPEC production quota; high cost of raw materials; infrastructure deficit; highly elevated cost of capital in the economy are some of the dangerous factors bedeviling Nigeria economy. So, it will be difficult for CBN’s demand side management tools to solve the problem. Unfortunately, the fiscal side is weak, with no positive contribution to make at this time, other than to engage in excessive borrowing and fiscal rascality. That is also driving up inflation,” he said.
Former National President of National Association of Government Approved Freight Forwarders, NAGAFF, Eugene Nweke, said the Federal Government’s economic policy is to be blamed for the rise in inflation rate.
“The closure of companies will further drive more citizens into poverty. Already the sector is struggling and the government policies are not helping. The ports being the gateway for trading and most goods imported are consumables; the scarce foreign exchange will drive up the cost of goods which will in turn drive up inflation,” he said.
Speaking about solutions and measures that the government should take to ameliorate the economic strains emanating from the high inflation, the Nigeria Labour Congress asked the federal government to effect payment of cost of living allowance to workers and others.
The NLC president Ayuba Wabba said the high inflation is a pointer to the fact that the economy is not healthy.
“Basically, it is also the evidence that the cost of goods and services especially foods and every item has gone haywire. It is a reflection of also the value of our currency. The value of our currency has continued to be on a free fall and all of this put together is what is reflected in the inflation data released. With all of these, it is the workers that are on fixed wages that are at the receiving end and basically, we now have a pool of the working poor because of the fact that it is difficult for people to have ends meet.
“Two days ago, I went to buy a loaf of bread in Abuja, a bread that used to be N250 moved to N500. Now, a loaf of bread is now N800/900. So, imagine somebody on N30, 000; how does he survive? It is really a difficult situation, that is why many countries around the world are paying what they called cost of living allowances and we have urged the government to look at it. Ghana recently paid 15 percent, South Africa paid to all workers some percentage to cushion the challenge of hyperinflation in the system which has also resulted to the high cost of living,” he said.
Adding its voice, Nigeria Employers’ Consultative Association (NECA) said the government should suspend all forms of new taxes and levies to give a respite on the spiking production cost.
“To tackle inflation, all forms of new taxes and levies should be suspended to give a respite on the spiking production cost. There should also be deeper stakeholder engagements across sectors to develop an enduring strategy on the way forward. The federal government like its counterpart in other climes must be responsive and deliberate in its efforts to flatten the inflationary pressures,” Director-General, NECA, Wale Oyerinde, said.
He added that the recommendation has become necessary as it is apparent that the government’s intervention so far has not impacted the rising inflationary pressures.
Speaking through its Director-General, Mr Wale Oyerinde, NECA contended that “it is apparent that the government’s intervention so far has not impacted the inflationary pressures that have kept rising.