Millions of Nigerians are daily grappling with unprecedented economic hardship caused by policies of the federal government. Sadly, the soaring inflation, acute food shortage, currency depreciation, declining purchasing power, unemployment, insecurity, rising fuel and transportation costs have aggravated the situation. The Consumer Price Index (CPI), which measures how much the average price of goods and services has changed over time, increased to 825.40 points in October 2024 from 804.10 points in September 2024. This represents an all-time high since 1995. Until 2024, CPI in Nigeria averaged 165.55 points.
All of these have contributed to high cost of living across the country. For instance, Nigeria’s inflation rate rose to 34.6 per cent in November 2024, galloping to almost 30- year high, up from 33.9 per cent in October, 2024. The cost of living also increased to 33.9 per cent in November 2024 over the same period in 2023, according to the National Bureau of Statistics (NBS) report. Nigeria’s food inflation is the second-highest in Africa and the fifth globally. The depreciation of the naira against major currencies has worsened imported food inflation.
The sliding value of naira underscores broader challenges such as rising inflation, exchange rate instability, dwindling foreign reserves, and persistent economic vulnerabilities. Rising fuel and transportation costs contribute to inflation, while insecurity in food-producing areas disrupts supply chains and drive up prices. This has been made even worse by lack of safety nets or credible welfare programmes for many households amid failing efforts by the Central Bank of Nigeria (CBN) to stabilise the nation’s currency exchange rate value. As a result, Nigeria is on fiscal edge having piled up N4trillion unfunded deficit in the last one year.
The situation calls for urgent need for the monetary and fiscal authorities to chart a new course for the economy in 2025. According to experts, the surging inflation in 2024 and the economic outlook in the first quarter of 2025 could be influenced by two major factors: the elevated base effect and the decline in household purchasing income. This means that the CBN may struggle with a possible negative Gross Domestic Product (GDP) for the first and second quarters of 2025, with inflation still soaring.
With real per capita GDP growth forecast for 2025 not looking bright in key sectors of the economy, the cost of living will likely deepen as result of the current economic hardship being faced by millions of poor Nigerians who bear the brunt of rising inflation. In spite of CBN’s promise to stem high inflation, stabilise the currency and reduce prices of essential commodities, a lot needs to be done in 2025. Last year, the federal government moved to set up price control board to regulate food prices but was not actualized. Also, the promise to distribute 42,000 tonnes to states from the National grains reserve to reduce cost of living didn’t materialise.
We believe that CBN’s monetary policies have not yielded the desired results. So far, there have been no adequate monetary and fiscal measures to contain the domestic and external shocks that have hit the economy as a result government’s reforms, especially the removal of fuel subsidy that has exacerbated cost of living in the country. Despite government’s reforms, the cost of living, inflation rate and prices of essential commodities remain high.
Government has not properly addressed the remote and immediate causes of these problems. Both fiscal and monetary policy measures have not been properly harnessed before implementation. Manufacturers currently groan as naira depreciation deepens forex crisis. In all, there is so much work to do to revamp the economy. According to figures from the NBS, Nigeria’s terms of trade have dropped sharply, due to high debt profile and servicing, excessive borrowings, high import bill as well as exchange rate instability.
The outlook for 2025 is not promising. It does not show that the cost of living will reduce. Under the situation, many households would device ways to reduce rising cost of living. They can do this by creating a budget that outlines income, expenses, and financial goals, reduce energy cost, cut unnecessary expenses, reduce food waste, and diversify income streams.
The government should address the challenges facing Nigeria’s business environment. Good policies are needed to attract foreign investments following the exit of many of them in 2024 due to choking economic environment and other inclement policies. It should also salvage investments across all levels and address insecurity and power supply challenges. Let it prioritize diversification of the economy through huge investment in non-oil sector. This will help boost the economy and grow the nation’s GDP.