The National Bureau of Statistics (NBS) released the nation’s consumer price index report on Wednesday, placing Nigeria’s inflation rate for May 2022 at 17.71%, an uptick compared to the previous month’s 16.82% rate.
A major downside to these high inflation numbers is that the purchasing power of Nigerians is constantly being eroded due to the increase in the prices of goods and services. This means that N100,000, for example, would not be able to buy as many goods this year when compared with last year.
A look at the NBS report shows that food inflation rose to 19.5%, its highest level since September 2021, while core inflation, which excludes volatile agricultural produce, also increased to its highest level in over 5 years at 14.9%.
According to the NBS, the rise in the food index was driven by the increase in the price of bread, cereals, tubers, wine, fish, meat, and oils. On the other hand, the rise in the core index is caused by spikes in the cost of cooking gas, liquid fuel, garments, and transportation amongst others.
Drivers of the rising inflation rate
A further breakdown of the report shows that the index tracking imported food items rose by 17.7% year-on-year in May 2022. This is due to the rising prices of food in foreign economies triggered by the Russia-Ukraine war.
According to the United Nations, the food security crisis stoked by the war in Ukraine is set to push more people into fleeing their homes, especially in poorer countries, thus driving the record levels of global displacement even higher.
Nigeria is not exempted from the countries affected by the rising cost of food items due to its import-dependent economy. A look at the foreign trade report from the NBS shows that Nigeria imported agricultural food items worth N443.36 billion in the first quarter of 2022.
Similarly, the transportation index rose by 16.4% year-on-year in the month under review largely due to the hike in the cost of diesel which is projected to hit N1,500 per litre in the coming weeks. In the same vein, the cost of air travel has also increased significantly, with JetA1 fuel already selling at N714 per litre.
The cost of transportation has a ripple effect on the cost of other goods and services in the country, considering that most food items are transported from the northern food-producing region to all the other parts of the country.
How to cope during inflation
- A major strategy to cope with the rising inflation rate is to prioritize needs and only buy things that are of utmost importance.
- Another strategy is to frontload costs. This means buying goods for future consumption in anticipation of further price increases.
- Earning more is also very important at this stage in the Nigerian economy. It is becoming increasingly important to find other streams of income to add to existing income streams. Various online outlets offer people the opportunity to work and earn from the comfort of their homes, thus making it easier to earn income from multiple sources.