According to late Sam Aluko, Nigerian economist, (1999), “The poor cannot sleep because they are hungry and the rich cannot sleep because the poor are awake and hungry. “
Therefore, it will be an understatement to say consumers in Nigeria are stretched, squeezed and embattled, with the resultant effect of buying less in quantity as well as lower quality.
Real income of fixed income earners fall in the face of rising price level, while the real income is rapidly eroding.
Consequently, in today's Nigeria, there is no middle class. You are either rich or poor and most Nigerians are the latter.
That speaks volumes for a country where most of the economic indices are either in reverse or operating upside down due to conflicting and competing interests.
The condition is made worse by the perceived “statist or welfarist disposition of government, when, in actual sense, a lot of activities 'either for or against the masses' are going on, taking governance to 'a new normal.' “
Global surge in food prices is taking its toll on emerging and developing economies for which Nigeria is not an exception.
Higher food prices have continued to exacerbate macro economic issues in a country like Nigeria bedeviled by high debt level and servicing, budget deficit, currency pressures, with the attendant deteriorating social conditions and fiscal Woes.
Analysts predict that the inflationary pressures would continue as long as energy crisis, currency pressures and hike in global price of commodities, worsened by Russia /Ukraine War, persist.
Consequently, with inflation rising to 16.82 percent, especially food inflation which spiked to 18.4% in April, consumers are under significant pressure.
Combining the daily rise in prices of food items with low disposable income as well as hike in transportation and distribution cost due to fuel and diesel prices and poor road network, more hardships and impoverishment continue.
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In fact the main culprit is the price of diesel, which has remained stubbornly high at N650 per liter.
"As a coping strategy, consumers are switching to cheaper substitutes, and in some cases reducing the quantity demanded. Also, in spite of the rising inflation, wages have largely remained stagnant. These conditions are eroding consumer purchasing power as disposable income remains squeezed. The NBS noted that 25 percent of Nigerians reduced food consumption while 50 percent reduced non-food consumption as they attempt to cope with the current hardship, “ says Bismarck Rewane, chief executive of the Financial Derivatives Company, in the current Digest.
Specifically, according to the nation's statistics Bureau (NBS) consumer inflation rose 0.90 per cent in April compared with 15.92 per cent recorded in the previous month.
The bureau also said that the composite food index rose year-on-year (YoY) by 1.17 basis points to 18.37 per cent in April from 17.20 per cent in March 2022.
According to NBS, the rise in food index was due to increases in prices of bread and cereals, food products, potatoes, yam, and other tubers, wine, fish, meat, and oils.
“In April 2022, the CPI which measures inflation increased to 16.82 per cent on a YoY basis. This is 1.3 per cent points lower compared to the rate recorded in April 2021 (18.12) per cent.
“This means that the headline inflation rate slowed down in April when compared to the same month in the previous year.
“Increases were recorded in all COICOP divisions that yielded the Headline index.
According to Rewane, the markets could likely be jittery if the policy making vacuum, ocassioned by the 'shocking but inevitable marching orders by president Muhammadu Buhari to political appointees to quit their plum jobs, is filled with incompetent and compromised technocrats.
He was of the opinion that the continued rise in inflation and particularly for April, “could force the Monetary Policy Committee, (MPC) to tighten its stance in May thereby forcing asset values down.“
