Counting Cost of Rising Prices on Consumers’ Socioeconomic Wellbeing, Economy

To many Nigerians, especially the employed in the public sector and others providing ancillary services in other sectors just to eke out a living, these are indeed hard times. With the devaluation of the naira and the spiraling inflationary trend, many workers are finding it extremely difficult to pay their bills on food, rent, children education and on other needs such that their capacity to contribute to the Gross Domestic Product, GDP, is waning by the day. In this analysis, Adejuwon Osunniyi, takes a critical look at how the rising inflation rate is affecting the people, using the direct one-on-one encounters to feel the pulse of Nigerians about the state of the economy.
With many states governments defaulting in the payment of salaries and jobs becoming increasingly difficult to secure in private and public sectors of the economy, millions of Nigerians are really bearing so much burden in their efforts to survive under the harsh conditions created by the fiscal challenges at all levels of government in the country.
From Ibadan through Akure, Abuja, Jalingo, Enugu, Uyo, Benin and down to Lagos, the outcry of ordinary Nigerians is assuming alarming proportions as the rising inflation continues to huge toll on their meagre earnings in an economy where an average worker takes care of many without jobs depending on him. The tell-tale stories of many of these Nigerians capture in illustrative terms how challenges of survival, worsened by the rising price level in the economy, are hampering their productive efforts. If Kalmadeen Yusuf is given any opportunity of making any wish before God today, it would definitely be that God should bring back the good old days. For Kalmadeen, an employee of the Oyo State Ministry of Education, where like other civil servants in the state, he is being owed about five month salaries, life has continued to become unbearable for he and his family members as they had been forced to be eating once in a day, instead of the regular three square meals.
“Our condition in Oyo State is becoming unbearable; we are not receiving our salaries and yet, the prices of food items have increased beyond what we can afford,” he said. When asked how he managed to buy food to feed his family, Kamaldeen said, “It has become a routine in my house that we eat once in a day; we eat at about 5.30pm every day and after that, everybody will go to bed at about 10pm.” Just like Kalmadeen, that Nigerians have been facing hard times in recent time is no longer be news. What seems alarming however is the rate at which the economy has continued to bite harder. For Kaosara Balogun, a civil servant in Lagos, though the state government did not owe workers, the astronomical increase in the prices of food items had been taking its toll on their salaries. According to her, the prices of rice and other staple food increased at the wake of the ongoing petrol scarcity. “The prices of food items I was buying for N1, 000 before soared by about 200 per cent,” Kaosara said. Her colleague in the state Ministry of Transportation, who identified himself as Bamidele Bakare, said the rise in the prices of foodstuffs had been gulping about 70 per cent of his salary. To civil servants in Osun, Ondo and other states, the government at all levels must do something about the rise in the prices of foodstuffs. According to them, it is no longer news that they are being owed, but it will be an embarrassment to the government that they are dying of hunger or they are caught stealing food.
“The unnecessary rise in the prices of food when salaries are not being paid has made our condition worse,” one of them said. Essentially referred to as super inflation, for many Nigerians, prices of food and other essential items have not only been soaring, but unfortunately been going out of hands. Surveys across major markets across the country showed that prices of foodstuffs and other essential commodities have continued to escalate. For instance, in Agbalata Market in Lagos, a basket of tomatoes formerly sold at N3, 000 now sells for N5, 500. Similarly, a bag of onion which sold for between N4, 000 and N5, 000, now sells for between N7, 000 and N8, 000. In Ajara New Market, another Lagos market, a basket of pepper formerly sold for between N 1, 500 and N2,500 now sells for N4,000. Musa Manaseh, a meat-seller at the Agbalata Market attributed the high cost of meat to increase in transportation fare. “Prices of the meat have gone up because of the high demand for them and the high cost of transportation from Northern Nigeria. “The truth of the matter is that the prices will remain like this until things stabilise,’’ he said. Mrs Helen Maduike, a house wife, said that the hike in food prices was alarming. “Increase in the prices of food items is getting worse by the day and that should not be. “ The government’s agency in charge of price regulation should do something about this,” she said. Apparently confirming the worsening situation, last week, reports had it that the nation’s Consumer Price Index (CPI), which measures inflation rate, recorded a sharp rise for the second consecutive month in March, peaking at 12.8 per cent year-on-year up from the 11.4 per cent recorded in the preceding month. In essence, Nigeria’s infl ation hits 12.8 per cent, highest in four years.
The latest rate, which represents the highest since July 2012, was said to have been spurred by faster increases across all divisions which contribute to the index, especially food in the Restaurants and Hotels division, which increased, albeit at a slower pace for the second consecutive month. The latest report of the CPI, published by the National Bureau of Statistics, NBS, the penultimate week indicated that the Food index increased by 11.3 per cent, up by 0.71 per cent points from rates recorded in January. During the month, all major food groups which contribute to the Food sub-index increased at a faster pace with the exception of potatoes, yams and other tubers and sugar, jam, honey, chocolate and confectionary group. The report further showed that imported food items as well as other necessary inputs to producing key local staples such as bread continue to drive the food index higher. According to the report, the food index increased by 11.3 per cent yearly with a 0.7 per cent points higher from rates recorded in January. The Bureau reported further that the highest price increases were recorded in the fish, vegetables and bread and cereals groups for the second consecutive month stating that on a monthly basis, the food sub-index increased by 1.4 per cent in February, 0.45 per cent points higher from rates recorded in January. Comparing price indices for the urban and rural areas of the country, NBS noted that in January, both indices recorded marked increases. It said while the urban index rose by 12.3 per cent yearly from 9.7 per cent recorded the month earlier, the rural index increased by 10.7 per cent in February from 9.5 per cent in January. It added that on monthly basis, both the urban and rural indices increased at a faster pace. Urban index increased by 3.0 per cent in February from 0.9 per cent in January, while the rural index increased by 1.8 per cent from 0.9 per cent in January.
The Bureau said: “Transportation costs, the planting season, and foreign exchange movements created significant upward pressures on the Food index in March. “The food index increased by 12.7 per cent, up by 1.4 per cent points from rates recorded in February as all major food groups which contribute to the Food sub-index increased at a faster pace. “Similarly, imported items as well as other domestic stocks continued to have ripple effects across many divisions that contribute to the Core. The index increased by 12.2 per cent in March, roughly 1.1per cent points from rates recorded in February. “While exhibiting a slower increase in the on a month-on-month basis, the Headline Index still recorded a notable increase in March relative to rates recorded in previous years. “The index increased by 2.2 per cent, in March, marginally lower from 2.3 per cent recorded in February.” Financial Derivative Company Limited, FDC, one of Nigeria’s financial consulting and economic research companies, had projected few weeks that due to incessant uncertainty surrounding the foreign exchange market, consumer prices are expected to remain high till April, while projecting an increase in inflation to 12.2 per cent in March. FDC monthly research report projected a likely significant increase of 0.7 per cent in the March inflation figure to 12.1 per cent, noting that the month of March is unique as the fuel scarcity intensified and higher transport costs filtered through to commodity prices such as beans, tomato and pepper.
“While our initial time series analysis projected an increase of 0.4 per cent, the severity and longevity of the prevailing fuel scarcity has distorted price levels. “Our retail study showed that prices of many consumer goods have remained stubbornly high and in some cases increased in spite of consumer resistance,” the consultancy stated. While calling for way out of the Nigeria’s ailing economy, Christine Lagarde, managing director of the International Monetary Fund, IMF, said the nation must adopt a fl exible exchange rate regime as she described the country’s economic situation as alarming. Speaking on the World Bank/ IMF special edition of BBC’s HardTalk anchored by Stephen Sackur, Lagarde said Nigeria has huge potential, especially in her youth. Largade maintained that IMF was ready to help Nigeria, appealing to President Muhammadu Buhari to take steps to move in the direction of ‘flexible exchange rate’. ‘We are not suggesting that flexible exchange rate is the panacea in all cases, but in this particular instance, we believe that it would help,’ she said.’
I know it is going to be difficult, and we very much hope that the Nigerian government under the leadership of President Buhari will be able to distinguish the value of moving in that direction, rather than causing the circumstances that can precipitate, a much more difficult decision making process at some stage. ‘We remain completely available to help, we believe that it is doable, it can be address.’ She described Nigeria as a great country with huge potential, but decried the current economic situation. ‘Nigeria has very strong resourceful and great people. The right policy mix is needed, which include, in our view, flexible exchange rate,’ she said. ‘Nigeria is one of those countries where there’s huge potential, fantastic youth but also a very alarming economic situation. It is heavily dependent on the oil resources. ‘Both in terms of fiscal revenue and exports. As a result of that, we have gone public and actually gone to the senate of Nigeria to explain our views, we believe that a more flexible exchange rate is in the interest of the Nigerian population. ‘If that doesn’t happen, we would continue to see the dual exchange rate, and putting in place a list of those product and services that are forbidden in Nigeria for import purposes, cannot be a substitute to a more flexible exchange rate.’

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