Nigeria’s inflation rate moved up to 22.41% in May, adding a 0.9% increase from the 22.22% rate it recorded in the previous month of April, according to the latest report from the Nigerian Bureau of Statistics (NBS).
The report, which was published on Thursday, also reveals a 4.70% increase in the headline inflation rate compared to the rate recorded in May 2022.
“In May 2023, the headline inflation rate increased to 22.41% relative to April 2023 headline inflation rate which was 22.22%,” the NBS said.
“Looking at the movement, the May 2023 inflation rate showed an increase of 0.19% points when compared to April 2023 headline inflation rate.
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“Similarly, on a year-on-year basis, the headline inflation rate was 4.70% points higher compared to the rate recorded in May 2022, which was (17.71%).”
According to the report, the above figures indicate that the headline inflation rate (year-on-year basis) increased in May 2023 when compared to the same month in the preceding year (i.e., May 2022).
In April, the report by the NBS noted that food inflation rose to 24.61%, buoyed by factors such as fuel scarcity, and the cash crunch – emanating from the chaotic implementation of the naira redesign policy.
Nigeria’s inflation rate is expected to rise further following the removal of fuel subsidy and the floatation of the naira by President Bola Tinubu.
The removal of fuel subsidies last month has seen an increase in transport fares across the nation, which has escalated rapidly – impacted the cost of goods and services.
Also, the introduction of the new forex regime, which has collapsed Nigeria’s multiple exchange rates into one unified rate under the Investor and Export window, is expected to rocket the cost of imported goods.
“With [dollars] now sold at market rates, imports like hair extensions will cost more,” Kalu Aja, a financial expert, noted.
“The economy will be repriced, and lots of spending that were “subsidized” will see its total prices come to the fore.”
Experts have advocated an upward review of minimum wage as a way of cushioning the effects of the recent policy changes. The idea, according to them, is to boost the spending power of workers through increased disposable income.
Already, the effects of past poor economic policies have taken a toll on the meager income of Nigerians – compounding economic hardship in the country.
The cost of basic food items required for survival by an average Nigerian family rose by 17.5 percent to N48,130 in January 2023 from N40,980 in the same period of last year, according to a 2023 Minimum Wages report.
Picodi.com, an international e-commerce platform, said the N48,130 is 60.4% higher than the country’s monthly minimum net wage of N30,000.
Aja, while urging the government to ensure that the poor are protected and can still survive, said to ameliorate the high cost of living resulting from the major policy changes, Nigeria needs to boost its export.
“Your job now is to look for an imported item that Nigerians like. The cost of that item is going up,” he said.
“Can you make it locally cheaper? If yes, that’s a business opportunity.”