Technocrat Media
The World Bank says Nigeria’s growing inflation in 2022 will continue to push millions of citizens into poverty.
The Bank disclosed this in a document titled “Nigeria Development Update: The Continuing Urgency of Business Unusual,” published in June 2022.
It is a troubling moment for Nigerians as the prices of daily essential commodities and items go up every day. From fuel scarcity to insecurity, gas, and energy crises amongst others, the country is facing a progressive inflation rate.
“Inflation in 2022 is projected to be higher than anticipated, increasing to 15.5 percent. Before the war, inflation was already a major macroeconomic challenge for Nigeria, and it was among the highest in the world.
“Inflationary pressures were compounded by policy distortions, in particular (i) lack of flexible foreign exchange (FX) management, (ii) trade restrictions, and (iii) conflicting monetary policy goals. In addition, global supply shocks exacerbated inflationary pressures and increased the urgency of addressing inflation. In May 2022, the Central Bank of Nigeria increased the interest rate for the first time in 18 months,” the World Bank stated.
The bank also said: “This was a welcome shift in Nigeria’s monetary policy stance but took place much later compared to actions taken by Central Banks worldwide and in a context in which FX management and development finance at subsidized rates have reduced the effectiveness of the monetary policy.
“As trade disruptions and commodity price volatility placed additional pressure on the domestic prices of food staples and fuel products, our forecast for the average inflation rate in 2022 has been revised upwards from 13.5 to 15.5 percent.”
It further noted that the ongoing war in Ukraine has also contributed to inflation and has the tendency of plunging more citizens into poverty.
“Increased inflationary pressures following the Ukraine war are expected to push even more Nigerians into poverty. Before the war, higher inflation pushed an estimated 8 million more Nigerians into poverty between 2020 and 2021. In 2021, inflation averaged 17 percent, undermining Nigeria’s economic recovery by eroding the purchasing power of the most vulnerable households.
“We project that the added inflationary pressure emanating from the war in Ukraine could push as many as one million more Nigerians into poverty, on top of the six million already projected before the war. Overall, the “inflation shock” is estimated to result in about 15 million more Nigerians living in poverty between 2020 and 2022.”
According to the bank, reducing inflation is arguably the key policy priority, as rising prices continue pushing millions of Nigerians into poverty.
The National Bureau of Statistics (NBS) reported a rise of 1.78% between April and May 2022. Inflation for May 2022 was 17.71%, from 16.82% in April 2022.
It appears there’s a looming poverty crisis ahead for Nigeria if urgent policy measures are not put in place to avert the situation proactively.
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