The National Bureau of Statistics (NBS) recently revealed that in May 2024, Nigeria’s inflation rate increased to 33.95% on a year-on-year basis.
The May 2024 inflation rate showed an increase of 0.26% compared to the April 2024 headline inflation rate.
On a year-on-year basis, the inflation rate was 11.54% higher than the rate recorded in May 2023, which was 22.41%.
This shows that the inflation rate (year-on-year basis) increased in May 2024 compared to the same month in the preceding year (May 2023).
While these figures look like every other data, in reality, the inflation figures give a deep understanding of how Nigerians are getting poorer.
The rising inflation rate means a Nigerians’ real income will buy fewer goods compared to previous years, which translates to a decrease in purchasing power.
Real income is the amount of money earned and the purchasing power of that money based on the inflation rate.
To contextualise how deeply inflation has impacted the finances of Nigerians, TimesNow.com.ng will use the current national minimum wage of N30,000 as labour unions and the Nigerian government try to reach an agreement.
The N30,000 minimum wage under review was first announced in 2019.
Economists calculate the real value of workers’ salaries or earnings by dividing income by one plus the inflation rate (Real Income = Wages / (1 + Inflation Rate).
Based on the formula, the value of Nigeria’s minimum wage in the last five years is here.
The figures above show that after accounting for inflation over five years, the purchasing power of a salary of N30,000 is now N11,629
The formula can also be used to calculate an individual’s current salary.
Another factor putting pressure on Nigerians’ finances is the exchange rate of the naira against foreign currencies due to the country’s dependence for imported products.
FMDQ data shows that the dollar at the official market is priced at N1,482.72, while in the black market, it is old as high as N1,500.
Emeka Ucheaga, technical assistant to the managing director/CEO at Credit Direct Limited, in a chat with TimesNow.com.ng explained the impact of inflation.
He said:
TimesNow.com.ng earlier reported that the director-general of the Manufacturing Association of Nigeria (MAN), Ajayi Kadri, confirmed that the organised private sector (OPS) accepted President Bola Tinubu’s proposal for a new minimum wage of N60,000.
The MAN DG clarified that ongoing negotiations between the government, the private sector, and labour were focused on establishing a minimum wage rather than a living wage, which represents the lowest amount that can be paid to any worker in the country.
