More Economic Woes for Nigerians as Inflation Continues to Rise

Following his inauguration as Nigeria's new president on May 29, 2023, Bola Ahmed Tinubu promptly started putting some of the policies he had pledged to implement into effect. He pledged to immediately remove the contentious fuel subsidies as the first of his economic initiatives. At that time, the country's fuel prices (based on the current Naira exchange rate) increased from $0.26 to $0.91 before stabilizing at $0.80. Needless to say, many Nigerians were caught off guard by the economic shock brought on by the dramatic rise in fuel prices. In the end, inflation rose to 22.79% in June 2023 from 22.41% in May 2023.

The president's other significant reform, the unification of the nation's currency rates, has caused the Nigerian currency to devalue to its lowest levels ever, so the elimination of fuel subsidies is hardly the only action taking place. Before unification, Nigeria's exchange rate was 460.702 Naira (USD/NGN); today, it averages 1,700 Naira to the US dollar.

The NNPCL recently raised the average price of petrol to N1,300 ($0.80) per liter, which caused Nigeria's headline inflation rate to increase by 0.55% month over month to 32.70% from 32.15% in August 2024.  Inflation during the month was driven by rising transportation and food prices, according to the National Bureau of Statistics' (NBS) Consumer Price Index (CPI) report.  September 2024 saw a 7.13 percentage point increase in the food inflation rate from 30.64% in September 2023 to 37.77% year over year. In September 2024, the food inflation rate was 2.64% on a month-over-month basis, which was 0.27% higher than the 2.37% rate in August 2024.

The government raised the minimum wage to N70,000 per month, but at current exchange rates, that amount is only $42.81. However, despite this increase, Nigerians are starving, rationing their food, or searching for less expensive options because they are unable to keep up with the rising inflation. Schools are losing students, and small businesses are closing. In the absence of government assurance, citizens have no hope that things will improve.

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