In June 2023, Nigeria experienced a significant rise in its inflation rate, reaching 22.79%. This marked an increase from the previous month’s rate of 22.41%, indicating a 0.30% uptick as reported by the National Bureau of Statistics (NBS) in their latest consumer price index report.
Comparing the current inflation rate to June 2022 figures, the increase of 4.19% is deeply concerning. The data shows that food inflation played a significant role in driving up inflation in June, accounting for a substantial portion. Food inflation rose from 24.82% in May to 25.25% in June.
The surge in food inflation on a year-on-year basis can be attributed to price hikes in fats and oils, cereals, fish, potatoes, yams, other tubers, fruits, meat, vegetables, milk, cheese, and eggs.
Housing, water, electricity, gas, and other fuels followed with a 3.81% increase, while communication recorded the lowest increase at 0.15%.
Regarding the core inflation rate on a month-on-month basis, it stood at 1.81% in May 2023, showing an increase of 0.35% from the previous month when it was 1.46% in April 2023.
The average annual inflation rate for the twelve months ending in May 2023 was 18.33%, which was 4.50% higher than the 13.83% recorded in May 2022.
Nigeria’s inflation rate has been rising continuously for the past six months, placing immense pressure on the central bank.
The central bank is expected to address these challenges and set interest rates during an upcoming meeting scheduled to take place in the following week.
This will be the first meeting since President Bola Tinubu assumed office and ordered the suspension and immediate arrest of former Central Bank Governor, Godwin Emefiele, in June.
According to the World Bank’s Nigeria Development Update report for June 2023, the skyrocketing inflation rate has led to a loss of purchasing power, resulting in increased poverty in the short term. Between January and May 2023, an estimated four million Nigerians have been pushed into poverty.
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Nigerian Citizens Face Hardships as Inflation Skyrockets
President Tinubu’s tenure has witnessed bold reform agendas aimed at enhancing the country’s economic growth.
These policies include the removal of the costly gasoline subsidy and flexible regulations for foreign exchange trading.
However, these policies, while promising long-term benefits, have immediate implications, contributing to the soaring inflation rate.
Nigerian society has been struggling since the removal of the petrol subsidy, with gasoline prices reaching as high as N600 per liter and transportation costs tripling.
There are also rumors of a possible fuel price increase in the coming weeks. Additionally, the recently signed student loan law has faced criticism, as it is projected to raise the tertiary education fees for federal university students from N20,000 to N150,000 or more.
Consideration of Minimum Wage Increase
Reports are suggesting that the presidency is considering a substantial increase in the minimum wage, raising it from the current N30,000 to an astonishing N200,000.
Such a move has garnered criticism, as analysts believe it could lead to hyperinflation, given the country’s limited financial resources.
Based on data from the National Bureau of Statistics (NBS), the World Bank estimates that 89.8 million Nigerians fell below the poverty line at the beginning of 2023, with an additional four million joining their ranks by May 2023, bringing the total to 93.8 million.
Food prices have surged by over 150%, and transportation costs have nearly doubled on a year-on-year basis, according to market checks by BusinessDay.
Conclusion
The Nigerian government must address the loopholes that have contributed to the country’s rising poverty rate. Without appropriate measures, Nigeria’s inflation rate may escalate beyond the levels witnessed in June. Also, the government should come through with the increase in the minimum wage.
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