Data from the Central Bank of Nigeria has revealed an increasing growth of inflation in Nigeria. While the inflation rate was 11.37 percent in April 2019, the figure stood at 12.34 percent in April 2020. The data has also shown a progressive increase in the inflation rate since August last year. From 11.02 percent in August, inflation rate increased to 11.24 percent in September and has since been increasing. Increases in inflation rate from August 2019 to April 2020 is shown in the figure below.
Table 1: Inflation Rate
| Period | Apr-19 | May-19 | Jun-19 | Jul-19 | Aug-19 | Sep-19 | Oct-19 | Nov-19 | Dec-19 | Jan-20 | Feb-20 | Mar-20 | Apr-20 |
| Inflation Rate for all Commodities | 11.37 | 11.4 | 11.22 | 11.08 | 11.02 | 11.24 | 11.61 | 11.85 | 11.98 | 12.13 | 12.2 | 12.26 | 12.34 |
Source: CBN
But these statistics may appear just as meaningless figures that barely impact the average Nigerian. To put this in context, many should have noticed slight increases in commodity prices since last year. Between November 2019 and now, commodity prices have increased by as much as 25 percent. For example, while a Nokia 6.2 smartphone was about ₦75,000 in November 2019, the price currently stands at about ₦95,000.
Within the reality of the current currency crises, increased commodity prices are not unexpected. In the last couple of months, the strength of the Nigerian Naira has progressively decreased. From exchange data from the Central Bank, naira to dollar value decreased from ₦306/$1 in January 2020 to ₦360/$1 in June 2020. Indications from the black-market show that dollar exchange currently stands at ₦430/$1.
From these statistics, many Nigerians became poor, or poorer, in the last couple of months. While personal income for many has not appreciably increased, their purchasing power has significantly decreased. By implication, many Nigerians now face unexpected toil of hardship. The situation is compounded by the COVID-19 that have resulted in income distortion, employment crises, and a host of other economic assaults.
Amidst these crises of income distortion, declining purchasing power, and persistent growth in inflation rate is a looming possibility of a recession. Earlier into the year, analysts have predicted a recession based on certain indications. As of June 1st, the Minister of Finance, Budget and National Planning also warned about Nigeria’s looming recession.
With this economic crisis is an urgent need for the government to rethink its economic strategy and provide measures to improve the overall economic outlook. Close to this is the need to provide stimulus to reduce the impact of the economic crises on citizens.
The recent review of the Monetary Policy Rate from 13.5 percent to 12.5 percent by the Central Bank is a commendable response. The review should ease the resumption of economic activities, stimulate growth, accelerate the pace of recovery, and restore livelihoods to many vulnerable Nigerians.
Yet, the Nigerian government needs to do in such a time. For example, the Cash Reserve Ratio (CRR) can be increased to reduce monetary circulation. Also, the government can by-pass banks and directly allocate foreign exchange to investors and manufacturers. Production can also be incentivized by the government as a measure against the growing inflation and the looming recession.