The latest inflation data released by the National Bureau of Statistics (NBS) raise fears of more hunger and poverty. In its Consumer Price Index for August 2023, the NBS said that the headline inflation rate increased to 25.8 per cent compared to the preceding month’s 24.08 per cent.
This portends more hardship for Nigerians. The government and the Central Bank of Nigeria need to roll out and harmonise mitigating fiscal and monetary policies to tame rising consumer prices.
Higher cost of living is hurting Nigerian households. The NBS said food inflation in August 2023 was 29.34 per cent on a year-on-year basis, which was 6.22 per cent points higher compared to the 23.12 per cent rate in August 2022.
It explained, “The rise was caused by increases in prices of oil and fat, bread and cereals, fish, fruit, meat, vegetables and potatoes, yam and other tubers, vegetable, milk, cheese, and eggs. On a month-on-month basis, the food inflation rate in August 2023 was 3.87 per cent, 0.41 per cent points higher compared to the rate in July 2023 (3.45 per cent).”
President Bola Tinubu and his economic management team must tame inflation. By mid-2022, a survey by the NBS and multiple international partners established that 133 million Nigerians were multi-dimensionally poor. This represents over 63 per cent of the country’s population.
Survival has been tough. Across the country, insecurity has emptied many farms, throwing millions out of employment. Estimates of the percentage of workers engaged in farming range from the international Labour Organisation’s 35.21 per cent, to 44.03 per cent by GlobalEconomy.com, and 45 per cent by the IMF. A former Agriculture Minister, Audu Ogbe, said there are 38 million smallholder farmers, engaged full time or part time, in cultivation nationwide. Many currently find it hard to produce.
Unemployment is also high, having hit 33.3 per cent, and 53.4 per cent among the youth.
High energy costs, a volatile foreign exchange market, and prohibitive borrowing rates also combine to push up prices, exacerbated by the country’s dependence on imports for most goods and services, including increasingly, food.
By June, consumer prices rocketed when a newly inaugurated Tinubu abruptly halted petrol subsidies and followed up with the unification of the naira exchange rates. The resulting increases in petrol prices and free fall of the naira against other world currencies – it exchanged at over N1,000 to $1 last weekend – have taken inflation from very high to alarming.
Undoubtedly, the COVID-19 pandemic and the Russia-Ukraine war adversely affected all countries, Nigeria inclusive, to various degrees.
Tinubu should however address the lingering structural and security challenges driving prices of food and basic services beyond the reach of many Nigerians. Successive Nigerian governments have been incompetent in managing inflation.
Underinvestment in the agricultural sector continues to push more Nigerians into hunger. The World Bank said an additional four million Nigerians slid into poverty in the first five months of 2023, helped by rising prices. Food takes up most household income today, leaving little or nothing for disposable spending.
Experts say that while advanced nations like the United States, and Japan view some level of inflation as tolerable to stimulate economic activities, Nigeria’s inflationary trend hinders its growth, and this is aggravated by its structural deficiencies, corruption, insecurity, and weak institutions.The power supply conundrum should be resolved. With less than 4,000 megawatts available from the national grid, productive activities are constrained.
This Tinubu administration should crush insecurity to encourage food production. States and local governments should invest in rural infrastructure, agricultural extension services and power.
There should be national emergency programmes on power supply agriculture, and security involving the central government, states, and LGs. They should all pull together to stimulate SMEs, job creation and food production.