A weary Nigerian population that has over the past two years endured the economic siege brought by the global supply chain snarls is facing an even harsher reality of surging prices.
The recent surge in petrol pump prices across the country is further straining the finances of millions of people whose incomes have already been hit by accelerating inflation in Africa’s most populous country and amplifying a cost of living crisis in Africa’s biggest economy.
Prices of petro rose as high as N617 per litres in Abuja, N568 in Lagos and N620 in Kaduna, an average of 15 percent rise from their previous prices a month ago owing to the reality of market forces after the removal of subsidy.
It is getting difficult daily for Nigerians, especially with the recent petrol subsidy removal and naira float and other reforms the Tinubu’s led-government is doing, Demola Balogun, a mechanic at Ketu, Lagos said.
“They are good reforms but they are seriously hurting Nigerians and businesses. My family can’t even afford to eat thrice daily anymore as prices keep soaring,” Balogun said.
The renewed pressure is not only felt by households but businesses, as well.
“I process fruits and vegetables and I have three generators and often buy five to 10 litres of petrol daily to power my two deep freezers,” Toyin Oladimeji, chief executive officer of Ola Foods, said.
“I bought a litre of petrol for N190–N210 last month, now I buy a litre for N500–N550 since the subsidy removal. My production cost has doubled owing to this amid declining sales,” Oladimeji said.
“All this is already threatening my business which has been struggling for survival. Right now, it is really difficult for small business operators who rely on petrol to power generators,” she added.
Food prices are up 200 percent and the cost of petrol have jumped by over 200 percent year to date, according to a BusinessDay’s check, further robbing households of their spending power, inflicting more pain and renewing pressure on them.
With food inflation hitting 25.25 percent, the key driver of Nigeria’s core inflation as over 90 percent of the country’s working population spends 60 percent of their income on food and related expenses, analysts say.
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The surge in inflation led to a 12 percent increase in household consumption expenditure to N27.3 trillion in the first half of 2022, the highest in five years, from N24.3 trillion in the corresponding period of 2021, according to NBS.
The situation has made many Nigerians poorer than they were in 2021, with 63 percent of the population (133 million) suffering from multidimensional poverty.
For Jide Pratt, chief operating officer of Aiona and country manager of Trade Grid, the current price increase is as a result of an increase in FX for the imports from 765 levels to 815 (parallel). This is to be expected due to the President seeking to harmonize rates.
“The rise in petrol does not help inflation which has been on the rise as food and transportation costs will rise and these two costs are a major part of expenditure for the populace,” Pratt said.
“It will push up the cost of living in a nation where we are barely surviving at the moment. What needs to be done and fast is suspension on some taxes, mass transportation using gas, single-digit loans for SMEs with long tenures.”
Data released by the National Bureau of Statistics (NBS) on Monday indicated that Nigeria’s headline inflation rose for the sixth consecutive time to 22.79 percent in June, primarily driven by surging food prices and the hike in petrol prices.
Atinuke Bello, a project manager at Trumbo Digital in Abuja, expressed her concerns about the recent price surge, saying, “Due to the rise in petrol prices, commuting to work will become challenging and will subsequently lead to an increase in the cost of various goods.
“As a result, my ability to freely go out and engage in activities has significantly diminished, leaving me confined to my home.”
Contemplating the recent surge in prices, Atinuke admitted uncertainty about the future and how she will manage to navigate through these challenges. However, like many Nigerians, she remains hopeful that the nation will endure and overcome these difficulties.
The World Bank said at the launch of the Nigeria Development Update for June 2023 said that the accelerating inflation in Africa’s biggest economy has pushed an additional four million Nigerians into poverty in the first five months of 2023.
