The National Bureau of Statistics (NBS) has revealed that Ondo, Kogi, and Rivers states experienced the highest year-on-year increase in average prices of goods, surpassing the national average. Inflation rate in Nigeria surged to 22.41 percent in May, reaching an 18-year record high, as stated by the NBS.
According to the NBS, “In May 2023, all items inflation rate on a year-on-year basis was highest in Ondo (25.84 percent), Kogi (25.70 percent), and Rivers (25.02 percent).” On the other hand, Taraba (19.55 percent), Sokoto (19.56 percent), and Plateau (19.89 percent) recorded the slowest rise in headline inflation, with their rates lower than the national average. Lagos, the nation’s commercial hub, witnessed an inflation rate of 24.33 percent in May.
The primary driver of inflation was the soaring cost of food and non-alcoholic beverages, which led to the 0.19 percentage point increase from the previous month. Year-on-year inflation rose by 4.70 percent from May 2022 when it stood at 17.71 percent.
The NBS, in its Consumer Price Index (CPI) report for May 2023, stated, “Looking at the movement, the May 2023 inflation rate showed an increase of 0.19 percentage points when compared to April 2023’s headline inflation rate. Similarly, on a year-on-year basis, the headline inflation rate was 4.70 percentage points higher compared to the rate recorded in May 2022.”
Despite the Central Bank of Nigeria’s continuous hike in the Monetary Policy Rate (MPR), from 11.5 percent last year to 18.5 percent in April 2023, inflation continues to rise. The former CBN Governor, Godwin Emefiele, defended the rate hikes, stating that they were intended to curb inflation. However, the Lagos Chamber of Commerce and Industry criticized the effectiveness of the rate hikes, emphasizing that they were hampering growth and adversely affecting vulnerable sectors.
The World Bank has expressed concerns over the impact of inflation on Nigeria’s economy, revealing that it has eroded the value of the N30,000 minimum wage by 55 percent and pushed five million people into poverty in 2022. The Manufacturers Association of Nigeria (MAN) has also voiced its concerns, noting that the value of unsold goods held by Nigerian producers rose by 22 percent to $1 billion by the end of 2022, mainly due to dwindling purchasing power caused by inflationary pressures.
Gabriel Idahosa, Deputy-President of the Lagos Chamber of Commerce and Industry, attributed the rising inflation to the failure of the Buhari administration to address the issue effectively. The chamber highlighted the need to tackle inflation without compromising economic growth and the well-being of vulnerable sectors.
As inflation continues to burden Nigerians and impede economic stability, policymakers face the pressing challenge of implementing measures to curb rising prices and revitalize the economy, ensuring the welfare of the populace.
The persistently high inflation rates in Ondo, Kogi, and Rivers states indicate the challenges faced by residents in these regions. The rising cost of goods and services puts additional strain on households, making basic necessities less affordable. Citizens are forced to allocate a larger portion of their income towards essential items, leaving less room for savings and discretionary spending.
The impact of inflation extends beyond individual households. Businesses and manufacturers are grappling with the consequences of rising prices, which erode profit margins and hinder investment and expansion plans. The Manufacturers Association of Nigeria (MAN) has reported a 22 percent increase in the value of unsold goods held by Nigerian producers, amounting to $1 billion by the end of 2022. This surplus inventory is primarily attributed to reduced purchasing power resulting from inflationary pressures.
The Lagos Chamber of Commerce and Industry has expressed concerns about the government’s approach to combating inflation. While the Central Bank of Nigeria has raised the Monetary Policy Rate (MPR) in an effort to curb inflation, the chamber argues that these rate hikes are not producing the desired results. Instead, they claim that the measures are stifling economic growth and creating uncertainty, particularly for vulnerable sectors.
The World Bank has highlighted the far-reaching consequences of inflation on Nigeria’s economy and its people. The erosion of the minimum wage by 55 percent has significant implications for workers’ standard of living, exacerbating poverty levels. The bank estimates that five million people fell below the poverty line in 2022 due to the impact of inflation. These findings underscore the urgency of implementing effective policies to address inflationary pressures and mitigate their adverse effects on the most vulnerable segments of society.