Fuel Subsidy: How To Cope With Nigeria’s Inflation
Inflationary pressures have since risen due to the accommodative monetary stances that have remained as part of the pandemic response and wage indexation.
Countries like Argentina, Chile, and Turkey, Nigeria faced significant depreciation pressures throughout 2021.
Understanding inflation gives an insight; which, for instance, reveals that the price of tangible assets like land and building, equipment, etc appreciates or increases and can be sold for higher prices. Selling these assets tends to be more profitable during inflation. Noting that a certain level of inflation is encouraged or promoted to encourage the people to spend more to some extent instead of saving, would help individuals and households know when and when not to buy or spend.
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If the purchasing power of money falls over time, then there may be a greater incentive to spend now instead of saving and spending later. A greater incentive to spend now rather than saving and spending later may exist if the purchasing power of money decreases over time. Spending may rise, which could stimulate economic growth in a nation.
According to the United Nations Department of Economic and Social Affairs, the rise in global commodity prices is particularly hurting poor households as they spend a much larger share of their income on food items.
Analysing the economies of developing nations around the world, the UN noted that the impact of rising inflation in developing countries, including Nigeria, where it is higher, would leave poor households most affected.
The analysis read, “The sharp increase in food prices risks pushing millions more into poverty while exacerbating inequality even further.
“Worryingly, surging food inflation could worsen food insecurity in many developing countries that are still struggling with economic shocks from the pandemic,”
Finally, maintaining financial prudence in a country where the purchasing power of the currency is low, can be done when one’s coat is cut according to their cloth and by understanding how inflation works.