By Usman Isnaila Isah
In 2021, the country’s inflation rate stands at 17 %, even though it fluctuated substantially in recent years. It tended to increase through 2002 – 2021 period ending at 17 % in 2021.
The only question begging for billions of answers is why inflation in Nigeria skyrocketed so high. According to the national bureau of statistics (NBS), the rise to a sharp increase in demand ahead of the Christmas season, import cost hikes due to the depreciation of the naira currency and a rise in production cost.
the NBS explains that the rising inflation rate was caused by soaring food prices disruption in food supply chain, rise in import cost due to the currency depreciation and increase in the cost of production.
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Inflation is a a serious problem for a country like Nigeria grappling with sundry issues like insecurity and poverty.
For instance, unlike in advance nations such as the US and Japan where some levels of inflation is tolerable to stimulate economic activities, Nigeria inflationary trend is detrimental to its growth due to its structural deficiency, logistics problem and insecurity among others.
High inflation tends to worsen inequality and poverty; because it hits income and savings harder for poorer or middle income households than wealthy households that have recently escaped poverty could be pushed back into it by rising inflation.
Problems Of Inflation In Nigeria
Inflation is a major drive of poverty in Nigeria, and other several macroeconomic problem such as insecurity, inadequate infrastructure, exchange rate hike, poor economic policies and debt upsurge. In an inflationary environment unevenly rising prices inevitably reduce the purchasing power of most consumers and this erosion of real income is the single biggest cost of inflation.
It also hurts the economy and consumers in 3 major ways, such as less purchasing power, less savings, loss of goods and services.
Basically, there are two main types of inflation, which are, Demand pull inflation and Cost push inflation. These two types of inflation usually cause an increase in the overall price level within an economy. Inflation high rates can be curbed via effective monetary and fiscal policies, and this implies that the government must manage the exchange rate via an effective monetary policy, encourage exportation, encourage and improve made in Nigeria if possible subsidized the dollar, and encourage the marketers.
Government must as a matter of fact show sincerity of purpose and real political will if it desires the country to pull out of the current inflation rate that the country currently finds itself.
