On Wednesday June 15, 2022, Nigeria’s National Bureau of Statistics (NBS) released the Consumer Price (CPI) Index report which showed the country’s inflation rate at an 11-month high of 17.71%, up from 16.82% in April.
The report, which was seen by Business Insider Africa, noted that the increase was driven mainly by skyrocketing food and fuel prices, influenced by the ongoing war in Ukraine.
Meanwhile, prior to the release of the latest CPI report, The World Bank had released a report on June 14 warning that Nigeria’s high inflation problem could potentially plunge millions of Nigerians into extreme poverty.
In the report titled The Continuing Urgency of Business Unusual, the multilateral lender noted that although Nigeria’s inflation problem predates the Ukrainian war, it has gotten worse since the war began and is likely to keep getting worse due to the impact of the war. And this could, in turn, plunge millions of Nigerians into extreme poverty by the end of 2022.
Do bear in mind that Nigeria has one of the highest inflation rates in Africa and the world at large.
“Inflation in Nigeria, already one of the highest in the world before the war in Ukraine, is likely to increase further as a result of the rise in global fuel and food prices caused by the war. And that, the World Bank estimates, is likely to push an additional one million Nigerians into poverty by the end of 2022, on top of the 6 million Nigerians that were already predicted to fall into poverty this year because of the rise in prices, particularly food prices,” the World Bank said.
Unfortunately, Nigeria’s high inflation is at risk of being complicated by a series of other macroeconomic challenges, including fiscal pressures that could result from skyrocketing fuel subsidy costs, especially at a time when oil production output has steadily been on a decline.
Meanwhile, in order to help avert the complications that could unfold, the World Bank has called on the Nigerian Government to consider implementing a number of robust and holistic reforms as soon as possible. Some of the suggested reforms are:
- Reducing inflation through a sequenced and coordinated mix of exchange rate, trade, monetary, and fiscal policies including the adoption of a single, market-responsive exchange rate
- Addressing mounting fiscal pressures at the federal and sub-national levels by phasing out the petrol subsidy (estimated to cost up to 5 trillion naira in 2022) and redirecting fiscal resources to investments in infrastructure, education, and health services
- Catalyzing private investment to boost job creation by improving the transparency of key government-to-business services and eliminating trade restrictions.