The inflation surge is everywhere.
The Stears newsroom has documented in great detail how rising food and energy costs have impacted consumers in recent weeks.
The Russian-Ukraine war is partly to blame for the current surge in diesel prices. Other supply chain constraints that pre-date the war also contributed to this. They include, refineries downsizing due to the Covid-19 pandemic and a global commitment to climate change.
While these factors aren’t particular to just Nigeria, other factors like a reduction in diesel supply by global refiners to Nigeria and limited access to FX by diesel marketers work together to make the situation particularly dire for the average Nigerian.
Unfortunately, given the epileptic nature of the national grid, Nigerians are faced with a hard choice of reducing our diesel demand or keeping demand and paying the high price in the face of supply shortages.
It’s not just in Nigeria, though. According to The Financial Times, surging inflation is expected to push British grocery bills by £380 this year. Officially, the Bank of England predicts that consumer price inflation could rise by 11% before 2022 ends.
Bringing it closer to home, the latest figures from the National Bureau of Statistics show that headline inflation in Nigeria is now at 17.7%, about 8.72 percentage points above the CBN’s inflation target ceiling of 9%. Nigerians aren’t strangers to double-digit inflation, but with our current inflation levels, the real value of a person’s ₦200,000 income in 2018 has fallen to ₦164,650 today.
The impact of this trend is so on the nose I feel a bit silly for spelling it out.
For starters, the rising inflation has brought a crude stop to the era of low interest rates worldwide. It goes without saying that higher interest rates make it more expensive to borrow (in theory, anyway), which means lower investment for businesses and can hurt consumer spending. Then there’s the impact that higher costs of products have on consumers’ wallet sizes. Even the World Bank warned in its latest Nigeria Development Update (NDU) report that the impact of people paying more for everyday necessities (such as powering their diesel-powered generators) could push an additional 1 million Nigerians into poverty. That’s worrying for a country crowned the world’s poverty capital a few years ago.
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