High Inflation Frustrating Nigeria’s Economic Recovery – World Bank

The World Bank has said Nigeria may not recover from its economic problems until the Nigerian Government solve the high inflation rate in the country.

Ezenwoko’s Blog reports that the global financial institution disclosed that the high inflation rate in Nigeria is eroding the purchasing power of the most vulnerable households.

The bank asserted that the high inflation rate in the country will lead to poverty, and the possible disruption of consumption, investment and saving decisions, among other consequences.

In its November edition of its Nigeria Development Update, the bank said Nigeria’s inflation rate may be among the world’s highest and seventh highest among Sub-Saharan African countries in 2022.

The document read in part, “High inflation is frustrating Nigeria’s economic recovery and eroding the purchasing power of the most vulnerable households. In the absence of measures to contain inflation, rising prices will continue to diminish the welfare of Nigerian households.

“If inflation had been closer to the CBN’s goal of nine per cent in 2021, the average Nigeria’s consumption would have been 15 per cent higher, and eight million Nigerians would have not fallen into poverty.

“If double-digit inflation persists during 2022-2023, rising prices will distort consumption, investment, and saving decisions of the government, households, and firms, with adverse ramifications for long-term borrowing and lending.

“Over time, the disproportionate impact of inflation on lower-income households and those working in sectors with low savings (e.g, agriculture) will exacerbate inequality. Ultimately, inflation will not only negatively affect incomes, but also economic productivity and job creation, further constraining the recovery.”

The World Bank said that inflationary pressures were trigged by multiple demand and supply shocks from the COVID-19 pandemic, rising insecurity and closure of borders in 2019.

It added that the current mix of monetary, fiscal, foreign exchange and trade policies also plays a prominent role as a driver of inflation.

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