The World Bank has 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.
In its latest Nigeria Development Update report for June 2023, the Bank said the loss of purchasing power from high inflation has increased poverty in the short term, pushing an estimated four million Nigerians into poverty between January 2023 and May 2023.
Nigeria’s economic performance weakened in the first part of 2023 amid a challenging global context – which has continued to pose challenges for Nigeria’s economy – and domestic economic distortions, thus pushing more people into poverty.
“Inflation pushed an estimated four million more Nigerians into poverty in the first five months of 2023, and average prices of locally produced staples have increased faster than average inflation,” the World Bank said on Tuesday.
The World Bank estimates based on the National Bureau of Statistics (NBS) data show that 89.8 million Nigerians fell below the poverty line at the start of 2023, with an additional four million making it 93.8 million in May of 2023. This accounts for 43 percent of Nigeria’s 216 million people.
It said richer households lost more purchasing power relative to their consumption than poorer households. “Nevertheless, the loss of purchasing power increased the poverty headcount rate by an estimated two percentage points or four million people.”
According to the International organisation, the number of poor people in rural areas increased by an estimated four percent, against 11 percent in urban settings, which is consistent with urban households less often consuming own-produced food than rural ones.
Data from National Bureau of Statistics show that the country’s headline inflation rate accelerated for the fifth consecutive time in May as it rose to 22.41 percent in May from 22.22 percent in the previous month.
Food inflation, which constitutes 50 percent of the inflation rate, rose to 24.82 percent in May from 24.61 percent in April.
Last year, the World Bank said Nigeria’s accelerated inflation growth had eroded the N30, 000 minimum wage by 35.5 percent and widened the poverty net with an estimated five million people in 2022
It said the higher inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly through higher prices of local staples- rice, bread, yam, and wheat, especially in non-rural areas.
Alex Sienaert, World Bank lead economist for Nigeria, said during a presentation in Abuja, the country’s capital that high inflation means that more Nigerians became poor.
In his analysis, he said N1,000 in April 2022 could purchase 1.7 tubers of yam, or 2.3 loaves of bread, or 1.7 liters of kerosene. The same amount in April 2023 can buy only 0.9 tubers of yam, 1.8 loaves of bread, or 0.9 liters of kerosene.
“Emerging and developing economies face deteriorating growth prospects due to the higher cost of borrowing, limited access to international capital markets, high inflation, and record debt levels.
“Despite the steepest global interest-rate hiking cycle in four decades, inflation remains high; even by end-2024, it is projected to remain above most central banks’ target ranges,” the World Bank said.