Financial experts lament decline in living standards due to high inflation rate


Abuja --------------- Financial experts have lamented that the increasing inflation rate in the country  has impacted negatively on the living standard of Nigerians.

The experts spoke to reporters against the backdrop of rising inflation rate which has reduced the purchasing power of individuals leading to a decline in living standards.

Available statistics from the National Bureau of Statistics, NBS, showed that Nigeria’s inflation rate increased to 17.71 per cent on a year-to-year basis by May 2022.

The NBS also said that prices of selected food items had increased in the last 12 months in its latest Food Price Watch report in the same period.

The World Bank, in its latest Global Economic Prospects Report said the damage from COVID-19 and the war in Ukraine had intensified the slowdown in the global economy.

The report said this had led to a period of weak growth and increased inflation, which had raised the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike.

Reacting to the development, a don, Prof. Aminu Usman, said the rising inflation rate amounted to devaluation of individual income, which amounted to falling purchasing power.

Usman, a lecturer at the Department of Economics, Kaduna State University,

said individuals would now purchase fewer commodities with the same given amount of money.

His words, “This scenario implies that people’s living condition are deteriorating, especially for low-income groups, whose income is rigidly fixed while prices are skyrocketing.

“It signifies the descent of many poor to further poverty and worsening conditions of living.

“This is coupled also with the high cost of fertiliser and heightened insecurity which combined to discourage farmers and farming. This has also caused very low projections for agric output,” he said, just as a Public Financial Management Consultant, Mr Ben Ekeyi, said that Nigeria’s inflation rate had a negative impact on the purchasing power of Nigerians in diverse ways.

According to Ekeyi, one of the impacts included reduced ability to purchase needed and required goods and services, especially where there was no corresponding increase in income.

“Others are a lower standard of living, increased poverty level as Nigerians are increasingly unable to access necessary goods and services.

“Increased school dropouts, especially at primary and secondary levels. More Nigerian families have become unable to sponsor their wards’ education, thereby, leading to drop out from schools,” Ekeyi further said.

He said that economists had established a link between lower purchasing power resulting from inflation and an increase in crime rate.

 According to him, where households are unable to cater for the needs of their members, there is a likelihood that some will go into criminal activities.

Ekeyi also said low purchasing power had been linked to increased social vices like prostitution, thuggery, youth restiveness, and suicide rates among others.

He said that low purchasing power had also increased urban-rural migration, as some Nigerians living in the cities were gradually relocating to their rural communities to due to the high cost of living in the cities.

According to him, the low purchasing power also has the potential of leading to death.

“When a person is unable to meet basic needs, especially in the area of health care,  he is most likely to die,” he said.

Mr Paul Alaje, a Senior Economist with SPM Professionals said with the high inflation rate,

it means that someone who had N100,000 this time in 2021, now has less than N85,000 this year for committing no crime.

“It means that the value of what money can buy has reduced. What is the implication?  People will now be able to buy less.

“If they could buy two bags of rice before with their income, now they can buy less than two bags.

“Does it mean that hunger in the family has reduced? The answer is No. People are still hungry but their livelihood resources now have weaker purchasing power.”

Alaje said this situation may put several families in jeopardy as some members may lose their jobs because of the failure of their employees to pay them due to a decline in sales.

“So, when inflation and unemployment set in, you have what we call stagflation, that is a situation where people’s hunger, poverty and deprivation is elevated or increased significantly.”

He said the general socio-economic implication was an increase in the crime rate.

Alaje said the average inflation rate for a nation should be between three to five per cent but unfortunately, in the last seven years Nigeria’s inflation rate had been in double digits.

A cross-section of Nigerians who spoke to NAN said the increasing inflation rate had reduced their standard of living and made saving impossible.

A pensioner Mr Joseph Onu, noted that inflation rate had reduced his standard of living, adding that it was the same situation with pensioners, especially, in the country.

According to Onu, many families were “cutting corners,” just to be able to eat.

“Among pensioners and the elderly, inflation is wreaking a lot of havoc, we are barely managing to survive.

“Pensioners are on their own, they are suffering, the government does not support pensioners in any way and there is no policy for the elderly in general.

“How do you pay your children’s fees, pay rent, treat medical issues, among others, as a pensioner? Some pensioners are maintaining their graduate children who do not have jobs.

“You see many old people dying of hypertension because of all these problems. Their life span could be prolonged if the government can take the responsibility for the health of the elderly,” he said.

A teacher and mother of four, Mrs Stella Mamah,said the high cost of living caused by inflation had become unbearable.

“As a mother and a public servant, it has not been easy to survive in today’s economy. You will not believe that 90 per cent of the family’s income is used for expenses. You cannot save anymore.

Her words, “The cost of living is high and it is becoming unbearable for everyone. From food items to other consumables, school fees, gas, electricity, etc,  it is worrisome.

“What I do as a mother is to tell my kids the reality on ground. I tell them that it is unacceptable to waste food and to be appreciative of what your parents give you.

“We are calling on the Nigerian government to seek out ways to reduce the inflation rate, 17.7 per cent rate is unacceptable to us. This is crucial to prevent crime rate and illegal activities.”

Also, 

A market woman, Mrs Rose Adonu said the increasing inflation made it impossible for her to make profit from sales, adding that things had never been this bad for her business.

” Since I started this business of selling Okpa, I have never seen anything like this before. I used to buy a bag of Okpa at N40,000,  now it is between N60,000 to N85,000. You are not talking of palm oil and other ingredients.

“Some people do not have money to buy Okpa, which is one of the cheapest local delicacies sold at N100 for a milk cup."