Tribune
THERE is an air of uncertainty among majority of the population as Nigeria’s inflation is set for the eighth consecutive monthly decline, yet financially embattled Nigerian consumers face high cost of living as they step into the Yuletide season.
Experts describe cost of living as the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time.
Stakeholders believe that things are high because Nigeria’s economy relies heavily on oil and with the natural resource losing value on the international market due to COVID-19- related supply and demand constraints, trade and travel restrictions, petroleum products have gotten more expensive as a result.
Some analysts have argued that the dilemma surrounding 2021 Christmas celebration is expected because Nigeria is still dogged by gruesome killings, incessant kidnapping, inclining debt, insecurity, unemployment, terrorism, exorbitant food prices, high fuel price, instability of government policies, lack of basic amenities, bad roads, poor health sector and infrastructure.
Others also believe that as the Yuletide inches closer, the usual excitement that comes with it has disappeared, and many Nigerians can only see the specter of hunger becoming more real.
Expectedly, residents who spoke with the Nigerian Tribune in Lagos said the inflation rate and the economic hardship are becoming unbearable, especially for families that have many children to care for.
A businessman, John Chukwudi, who spoke to our correspondent said he wanted to travel home to Imo State with his family but had suspended the journey due to economic hardship.
According to him, transport alone to his state by road has already gone up to N15,000 per person, which means that a family of eight will need up to N120,000 for the first half of the trip. He said he sells food items but there are no buyers to patronise him, putting the blame on monumental inflation which he said the government had been unable to control. “As I am talking to you now, I don’t even know how to provide even a fowl for a family of eight including myself and my wife,” he said.
Mr Chukwudi lamented that the Federal Government was not even worried about the economic plight of the people, saying that the government has totally forgotten price control. Nigerian Tribune findings revealed that high cost of living is beginning to take a heavy toll on average Nigerians. This is compounded by soaring prices of foodstuffs and liquefied petroleum gas, a development that appears to be getting worse as the Yuletide season approaches.
Already, many housewives are crying out, even as many bread winners are afraid that the high cost of living may threaten their desire to enjoy Christmas, meet family obligations and make their children happy.
This is true especially as it has been discovered that households in Nigeria spend 100 per cent or more of their monthly income on Christmas.
World Remit, global payments company, recently indicated that the majority of Nigeria households spend 100 per cent or more of their monthly income on Christmas. It stated, “Majority of Nigerian households spend 196 per cent of monthly income on Christmas.
“The traditional Nigerian celebration starts from the first day of December with the sounds of fireworks and last-minute shopping, which attracts an increase in the price of items from five per cent to even 50 percent the closer it gets to the festivities. “Most of the shopping is done in November, except for perishable goods, which are bought in early December.”
The National Bureau of Statistics (NBS) is scheduled to announce the November inflation rate on December 15.
This is expected to follow the trend of Nigeria’s inflation rate for the month of October 2021, which trickled down to 15.99 percent from 16.63 per cent recorded in the previous month, and driven by the decline in the two components of the index. The core inflation dropped to 13.24 percent compared to 13.74 percent recorded in September, while food inflation moved downwards to 18.34 percent as opposed to 19.57 percent in the previous month.
Analysts at Lagos-based Financial Derivatives Company (FDC) Limited say their econometric model is projecting that official headline inflation will decline again by 0.79 percent to 15.2 percent.
“Our survey of Lagos markets showed that the prices of staple food items fell sharply by an average of 22.46 per cent compared with the last year.
“For example, a basket of tomatoes is selling for N20,000 (2020: N35,000), onions is currently selling for N45,000 (2020: N80,000) whilst the price of rice and pepper remain flat. “The general tapering of food prices is mainly as a result of harvests but also partly due to price resistance by financially embattled Nigerian consumers,” the analysts stated in an emailed note.
A survey of prices in some markets across Lagos metropolis showed there was a slight increase in prices of foodstuffs when compared to the month of October. According to findings, the price of a 10kg bag of Mama Gold rice increased by 3.28 percent to sell for an average of N6,300 compared to N6,100 recorded in the previous month, while the price of a big bag of dry onions increased by 2.31 percent to sell for an average of N59,000.
Just as the price of major food items like onions, yam, and pasta soared marginally, some other food items such as garri, beans recorded a price decline compared to the previous month. At places like Mushin, Mile 12, Ile Epo, Mile 2 and Pelewura market, price of a big bag of Ijebu garri declined by 10 percent to sell for an average of N13,500 compared to N15,000 recorded in the previous month.
It could be recalled that it was sold for N25,000 earlier in the year. Also, a bag of yellow garri that was initially sold for an average of N14,800 now sells for N13,600, representing an 8.15 per cent decrease in price.
However, in spite of the slight moderation in inflation, consumers are jittery about the possible impact of an increase in the price of petrol to N340 per litre in February.
Also, more scary is the fact that the price of cooking gas has remained stubbornly high at N10,200 per cylinder and diesel is selling for N345/litre (N195/litre in 2020).
“Based on our econometric model, official inflation is likely to decline again in November to 15.2 percent from 15.99 percent in October. This will be the eighth consecutive monthly decline and will bring the official inflation rate to its lowest point in 11 months.
But FDC’s survey showed that prices increased across the non-food basket. The price of diesel, cooking gas, transport costs (road, air) remained stubbornly high, suggesting a likely increase in core inflation to 13.51 percent from 13.14 per cent in October.
According to the firm of financial experts, with the exception of core inflation, all inflation sub-indices are expected to decline in November. Food inflation is projected to fall by 1.14 per cent to 17.2 per cent while month-on-month inflation is expected to decline by 0.05 per cent to 0.92 per cent (11.94 percent annualized).
“This will be partly supported by improved supply due to the harvest amid weak aggregate demand. Our survey of the Lagos market showed that the price of tomatoes, onions, rice and pepper declined by an average of 22.46 percent on an annual basis and by 4.72 percent on a monthly basis,” the analysts stated.
The Bismark Rewane-led FDC further observed that even though the moderation in headline inflation is sustained, Nigerian inflation remains a ‘silent thief’. It is still above the upper limit of the Central Bank of Nigeria (CBN’s) target (nine per cent).
The CBN has also consistently maintained that an inflation rate above 12 percent is growth retarding.
Owing to the soaring price of cooking gas, many households who are on shoestrings are already learning the wisdom dictated by necessity, shifting to dirty fuels such as sawdust and charcoal. President of the National Association of Liquified Petroleum Gas Marketers (NALPGAM) Bassey Essien, in a recent symposium, admitted that more Nigerians were gradually resorting to coal, sawdust, kerosene, and other dirty fuels, a situation he said had severe and environmental implications. Also, Professor Uche Uwaleke, a finance and capital market professor at the Nassarawa State University Keffi, the continuous rise in price level is attributed to the spate of insecurity across the country, which had taken a toll on agricultural activities with very serious implication on food inflation driving the other indices.
This story first appeared in Tribune
