The World Bank has projected that Nigeria’s inflation would increase in 2022, such that it may become the highest in the world.
Should inflation increase as projected by World Bank, Nigerians would pay more for foods and other commodities this year.
With increasing food prices and that of other commodities diminishing the livelihoods of many households, Nigeria’s inflation rate, according to the international financial body, is also projected to be the seventh-highest among Sub-Saharan African countries in 2022.
“In 2022, Nigeria is expected to have one of the highest inflation rates in the world and the seventh highest in Sub-Saharan Africa,” World Bank said in the November edition of its Nigeria Development Update.
According to the global financial institution, high inflation hampers the country’s attempt to achieve economic recovery and erodes the purchasing power of the most vulnerable households.
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.”
How high inflation rate would affect Nigerians
Aside from increasing food prices, a high inflation rate as projected by the World Bank would mean that no less than eight million Nigerians would be pushed into poverty.
More so, there’s likely to be disruption of consumption, investment, and saving decisions, as the economy would become stiffening.
“If inflation had been closer to the CBN’s goal of nine percent in 2021, average Nigeria’s consumption would have been 15 percent 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,” World Bank explained.