Cost of living pressure in Nigeria seen easing in 2023

Nigerians should expect respite on the cost of living crisis as analysts see the pressure easing in 2023 compared to the previous year.

The analysts are basing their optimism on the recently released inflation rate which slowed for the first time in 11 months in December 2022.

According to the National Bureau of Statistics (NBS), the inflation rate in December eased to 21.34 percent from 21.47 percent in the previous month.

In 2022, Nigerians were plagued with 10-month straight inflation figures, tight monetary policy, flooding, and constant fuel scarcity which accelerated the cost of living crisis.

Abiodun Keripe, managing director of Afrinvest Consulting Limited, explains that inflation is a proxy for the cost of living. In his outlook for inflation on a year-on-year or average basis, he projects that inflation should be lower than that of 2022.

“Inflation will be moderate, and prices will rise at a slower rate as such it doesn’t mean that the cost of living is moderating but that the rate at which goods are rising will moderate,” he said.

Cardinal Stone in its research 2023 outlook, titled “Balancing the livers” explained that climate changes might push the prices of food higher but also it will moderate in the course of the year.

Read also: Nigeria’s December inflation eludes market reality

“We expect inflation to soar in the year’s first half before moderating slightly in H2’22 due to a high-base effect,” the report said.

“This report assumes that 2023 will be mostly transitional and gradual, with strategic priorities of the new administration likely to be more pronounced in 2024,” the report added.

Also, Moses Ojo, a Lagos-based economic analyst also believes that the cost of living crisis eases out for Nigerians.

“Yes, I expect the cost of living pressure to ameliorate slightly on average this year,”

“The reason for this view is that the apex bank has been able to stabilise the exchange rate to some extent.”

He noted that exchange rate fluctuation is one of the major contributors to the high cost of living in the country.

“Another risk such as insecurity challenges which is militating against farmers’ ability to go to the farm still persists. By and large, the pressure is expected to ameliorate this year,” he said.

However, Ibrahim Tajudeen, director of research and strategy at Chapel Hill Denham is of the opinion that the cost of living pressure will continue unless the government implements plans, strategies, and reforms that can elevate consumer buying power.

“The cost of living is not completely inflation; it can be influenced by policies, forces of demand and supply. If we do not influence policies that fix the FX market it will still affect the cost of living,” Tajudeen said.

He further said that the exchange rate was just N450-500 per dollar as at last year, but it’s presently over N700 and there’s no certainty it won’t go higher later this year.

“The cost of buying clothes from abroad will go higher and the cost of renting houses will go higher also because they’ll capture the cost of raw materials in the rent.”

“The only thing I’m not sure about is how high it’s going to go,” he said.