Inflation is the rate of increase in prices over a given period of time. Inflation is the deterioration of real income, which occurs when prices rise unevenly and causes some customers’ purchasing power to decline. Inflation is an economic phenomenon that causes the decrease in the purchasing power of money reflected in the general increase in the prices of goods and services. For both those who receive and pay fixed interest rates, inflation may eventually affect their ability to make purchases. The cost of living for consumers is influenced by the cost of several goods and services as well as their proportion in household spending.
The consumer price index (CPI), which is used to gauge inflation, keeps the economy healthy when it is low. However, when the rate of inflation increases quickly, it can have a negative impact on the economy through lowering buying power, raising interest rates, slowing economic growth, and other factors. Between 2007 and 2023, Nigeria’s core inflation rate averaged 11.15 percent, reaching an all-time high of 21.50 percent in August of 2023.
The National Bureau of Statistics’ (NBS) CPI calculates the average change in prices over time for goods and services that people use on a daily basis. It calculates the rate of inflation. The cost of food, housing and energy, clothing and footwear, and transportation are the four areas where consumer prices are rising the fastest in Nigeria. This is in accordance with the CPI information from the NBS.
One can argue that Nigeria’s two structural policies, which were addressed a few months ago, are the main causes of the country’s rising inflation. Specifically, the CBN’s foreign exchange peg and subsidy removal on petrol. Government pricing controls that had previously been in place were removed by these policies, which led to an increase in prices that reflected and covered the true cost of production.
There is no doubt that there is inflation in Nigeria; these days, it’s hard to turn on the news or listen to a radio station without hearing someone mention how things are ever increasing. You are aware that inflation can have a significant impact on the economy and businesses. Most significantly, high inflation is harmful to the entire economy since it will result in continued underperformance of families and we will continue to pay more for the same goods and services. Therefore, no Nigerian consumer can avoid the topic of inflation.
Our ability to build a solid financial future is significantly impacted by inflation. Our purchasing power may decrease, our standard of living may be impacted, and this could endanger our family. Here are some strategies for surviving inflation and even emerging from it better than we were before, even though we as people cannot control it.
In order to mitigate the impact of inflation on one’s spending, surviving the growing consumer prices in Nigeria demands some intentional measures and actions. Accepting inflation and quickly evolving and adapting is the best strategy for combating it. Change your approach, implement small improvements, and observe the significant impact they have.
Tracking your costs is the greatest way to manage your money at any moment. It is one technique that works best for adjusting during inflation, even if you don’t track your costs at any other time. Find areas and strategies to reduce costs by listing your expenses along with their respective costs. Apply the scale of preference principle. Remove the items you don’t actually need and concentrate on the ones you need.
Find items you can replace with alternatives to reduce costs. Substitutes provide choices and alternatives for consumers. Instead of choosing something more expensive, think about substituting and buying cheaper goods and services that offer the same quality and value. Find things that are overpriced and replace them with a new brand that fulfils the same need at a reasonable price. Look for coupons and use them when you shop. Although you might not believe the differences matter much, they do pile up. Small adjustments make a tremendous difference
Another tactic is to engage in bulk purchasing, which involves purchasing items in large quantities early on or when you believe the price is reasonable because you never know when they will increase more in price. Avoid impulse buying and purchase only what you need to reduce waste.
Surviving the rising prices in Nigeria requires that you turn the challenges into opportunities. Within any challenge lies an opportunity. Inflation is a time of uncertainty where opportunities are presented for smart investors to enrich themselves and make fortunes. Take advantage of the uncertainty, invest and turn the challenges into opportunities. An effective investing plan includes keeping an eye out for situations that offer the best investment opportunities. Inflation is an occurrence. Holding investments whose value grows faster than the rate of inflation is the key to making money during an inflationary period.
Get involved with investments that do well during inflationary periods, such as real estate, gold, silver, oil, equities, inflation-indexed bonds, and fertilizers, to mention a few, which are historically considered to be hedges against inflation. Commercial real estate could be an excellent place to start if you are unsure of your capacity to invest in these sectors. Once you are more confident, you can start investing in commodities. No matter how little, start right now. By making investments that will generate steady cash flow, you can fend off on Inflation and grow your wealth.
Embracing agriculture is another tactic. In Nigeria, there have been significant price hikes in the cost of food. Finding strategies to spend less on consumer goods is necessary to survive the rising cost of goods. Why not think about cultivating your own food? At least there are some food items that you can easily grow on your own. Grow your vegetables, yam, cassava, fish, and other food items that you can easily grow in that small area at your backyard. Have a small farm or garden. One method for helping millions of Nigerians put food on their tables and lessen the impact of the high inflation rate is through agriculture. This can lessen the over-dependence on imported foods and assist millions of families attain food security.
Inflation is not inherently bad. Some inflation can be good for the economy because it drives reasonable increases in price level which support the economic growth of any country. But when it becomes a high inflation which is considered bad because prices increase at a rate that is far higher than most consumers can manage. That is why it is advisable to anticipate and plan ahead for inflation. If you are yet to planned for it, it is not too late, start by applying the approaches above for a start. Rather than waiting for your family’s safety and purchasing power to be threatened. Keep in mind that financial literacy can alleviate poverty.
