A few days into the festive period, there are clear signals that Nigerians may experience a bleak yuletide as the country’s inflation soared to 28.20 per cent in November, the highest since August 2005.
According to the National Bureau of Statistics, the figure represents the eleventh time Nigeria’s inflation rate is increasing in 2023.
From January to November this year, the country’s inflation rate increased by 6.68 per cent, the fastest since the recession that struck the nation in 2016.
Food items, accommodation, clothing, electricity, education fees and other prices have all hit the rooftop.
A further analysis showed that food inflation, which stood at 32.84 per cent in October, is the primary driver of the country’s rising headline inflation rate.
For instance, a 50kg bag of rice now sells for N55,000 from N38,000 it was sold last December, 25 litres of vegetable oil now 42,000 from N32,000, and a chicken (layer) now N6,000 from N3,000 previous year.
Apart from food prices, the cost of transportation and other services have doubled nationwide.
This is not unconnected to the negative impact of fuel subsidy removal and foreign exchange fluctuation.
President Bola Ahmed Tinubu introduced twin policies of fuel subsidy removal and Naira floating in June, which led to a hike in fuel price to over N617 per litre and jerked up the forex rate to over N800/$1.
Despite the gains of the policies advocated by the Tinubu administration, Nigerians have continued to suffer the negative impact.
This came as out of 15 million households targeted for the N25,000 cash transfer, only 1.5 million have received the Federal Government’s fuel subsidy palliative from the $400 million World Bank loan.
The persistent naira scarcity nationwide has added more pain to the impact of rising inflation.
Despite CBN’s assurance on the sufficiency of cash, Nigerians and point-of-sale operators have continued to lament the scarcity of the banknotes.
Speaking with DAILY POST on Monday, a don at the Lead City University in Ibadan, Prof Godwin Oyedokun, said the soaring inflation rate will significantly affect Nigerians during the festive season.
“The soaring inflation in Nigeria will likely significantly impact Nigerians during the Yuletide season, in terms of the overall cost of living.
“With inflation, the prices of goods and services tend to rise. This can lead to a higher cost of living, making it more expensive for Nigerians to celebrate during the Yuletide season.
“Essentials like food, clothing, and transportation may become more expensive, affecting their ability to participate fully in the festivities.
“When inflation increases, the purchasing power of the Nigerian currency decreases. This means that Nigerians may have to spend more to buy the same goods or services they previously purchased for less. As a result, Nigerians’ ability to afford gifts, travel, or other yuletide-related expenses may be limited.
“Inflation can significantly strain individuals and households. It can lead to reduced savings, increased debt burden, and financial difficulties, making it harder for Nigerians to meet their daily needs, let alone enjoy the Yuletide season.
“Impact on small businesses is another issue. Small businesses often struggle during soaring inflation. Higher costs of raw materials and other inputs and reduced consumer purchasing power can make it challenging for them to operate profitably.
“This can negatively affect their ability to offer discounts, promotions, or quality products during the yuletide, further impacting Nigerians’ buying power and enjoyment.
“Planning and budgeting difficulties: With inflation, it becomes harder for individuals and families to plan and budget for the yuletide. The volatile prices make it challenging to estimate expenses accurately, leading to potential financial strain if budgeting is not adjusted accordingly”, he told DAILY POST.
Similarly, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, said the rising inflation rate is expected because of the severe pressures on the Naira against the US Dollar.
“The rising inflation rate is expected because of the serious pressures on the Naira against the US dollar, which always creates a chain reaction for inflationary trends.
“The federal government has been unable to defend the Naira adequately against the US dollar due to the scarcity of foreign exchange.
“The CBN policy has not started yielding results, so the economy is reacting negatively. Food inflation is rising, and the cost of major food items has increased by over 100 per cent.
“Cash scarcity is another major challenge Nigerians face as we move towards the end of Christmas and the new year.
“The CBN is studying the situation, but their policies are relatively slow to turn the economic tide immediately.
“Overall, the soaring inflation in Nigeria will likely add financial pressure on Nigerians, impacting their ability to fully enjoy the yuletide season and sustain their cost of living”, he said.
Also, Mazi Okechukwu Unegbu, a former president of the Chartered Institute of Bankers of Nigeria, said Nigeria’s inflation might surpass 35 per cent.
“Undoubtedly, we will have a bleak yuletide due to the rising inflation and cash crunch.
“The inflation is faulty, and it is not real. We also keep our own records of inflation for over ten years. Looking at the inflation rate is about 35 per cent from my calculation, while food inflation is more than 35 per cent.
“The World Bank recommendation on hike in fuel price should not be followed; the Central Bank of Nigeria should concentrate on its core function of adviser to the economy and currency examination”, he told DAILY POST.
Dr Uju Ogunbunka, the President of the Bank Customers’ Association of Nigeria, said that as long as the country is dependent on imported goods, inflation will continue to wreak havoc on the Nation’s economy and Nigerians.
“The Inflation ought to rise; we are not producing as we ought to in Nigeria; we are just consuming what is imported. And prices are increasing daily. As long as we are not producing, inflation will continue to rise.
“The problem is that people do not have the money to buy because Naira is scarce. Until last week, there was still naira scarcity. What is paramount now is the availability of cash,” he said.
On his part, the former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola, is pessimistic that monetary measures will curb inflation.
“Nigeria inflation is not demand induced. Therefore, there is not much monetary management can do to curb it. The inflationary pressure is cost-induced to affect the different sectors of agriculture, manufacturing, and infrastructures”, he said.