My thoughts on growing inflation rate

According to you, what are the major reasons behind the growing Inflation rate, specifically in your country?

Inflation is an economic concept that refers to the rate at which general level of goods and services rises and subsequently purchasing power falls. central bank of Nigeria attempt to limit inflation and avoid deflation in other to keep the economy running smoothly

Inflation can be cause my different factors such as increase in government spending an increase in production cost and decrease in supply of money. When the cost of goods and services goes up each unit of currency buys fewer goods therefore inflation is reduction in purchasing power

Nigeria inflation rate rose to 29.90% in January 2024 from 28.92% on December 2023 this is highest it has been for two decades

Causes of inflation in Nigeria

1. Fuel price
   Decline in oil prices cause by a slow post pandemic economic recovery are causing freight prices to fall which in turn has lowered production cost and consumer prices in many countries
   But Nigerians are not benefiting from the global decline in oil and natural gas rather the are paying more due to the removal of fuel subsidy
   fuel prices soared from N557 to N617 per liter after the removal of subsidy in may 2023 on other words while falling oil and natural gas are reducing in other countries , the products cost are rising in Nigeria

2. Supply constraint and inflation
   Another factor that is causing global inflation is the easing of pandemic era supply chain bottlenecks which occurred faster than expected
   Nigeria however continue to endure supply constraints because of floating the local currency the naira.floating the naira means that the value will be determined by market force of demand and supply or what the central bank refers to as the willing buyer, the willing seller exchange rate
   Currency depreciation has increased the price of import goods Nigeria is an import dependent economy and Nigeria importers are buying goods for prices already very high abroad
   The cost of this goods has also gone up because of higher tariff cause by the depreciation of naira
   For instance only 1% of the roughly six millions tones of wheat Nigeria consume annually are produced domestically,,.the war on Ukraine and Russia has affected Nigeria as Nigeria import wheat from Ukraine and fertilizer in Russia

3. Agricultural sector
   Food inflation in Nigeria also reflect low productivity I% agriculture sector output has failed to keep up with population growth .Nigerian population has been growing by 2.4% a year while the growth of agriculture value added as a paltry 1.8%

[my phone]

Do you think that the increasing Inflation rates effect all the classes and fields of the life?

The increase in inflation rates has favorable and unfavorable impacts

The favorable impacts of inflation are

1. Higher profit
   Inflation usually benefits the producer of products .they experience better profits since the their products at higher prices

2. Better investment return during inflation the investors and entrepreneurs received added incentives for investing in productive activities
   Therefore the receive better returns.

3. More employment and better income
   Since production increases there is an increase demand for various production factors including manpower therefore employment and income increases during inflation
   Share holders can earn a good income
   If a company earn higher profit which is possible during inflation it can declare dividends to it's shareholders this the share holders can experience a rise in their divided during inflation period

The unfavorable impact of inflation

1. Fixed income group experience a fall income
   The true income of an individual is the purchasing power of his money income for people that belong to this fixed income group like salary earners,pensioners this means the will experience a fall in real income in the other word their purchasing power will reduce

2. Inequality in income distribution increases
   During inflation business men and entrepreneur experience increase in profit , in the other hand people receiving fixed salary experience decline in their real income hence the inequality in income becomes acute during this period

3. Upset the planning process
   During inflation the prices of goods, raw materials and factors of production increases therefore the government has to spend more money to complete any investment taken up during the planning period
   If the government fails to rise more financial resources through savings and taxes then the entire planing will be upset

4. Speculative investment increases
   Let's say the price level are increasing in a very high rate people are unsure about how much the price will rise in the next few weeks or months in such cases many people will start speculative investment
   For instance the might start buying shares , gems ,lands just for speculative purposes this is done with the objective of making quick profit, such investment does not help in making productive capital in the economy

5. Negative impact on export
   Since the prices of raw materials and factors of production increases the price of export items also increases during inflation.hence their demand I the foreign market might fall which will lead to fall in the export income of the country

As a common citizen, how can we play our part to control the Inflation?
These are the things we need to do to be able to control inflation as common citizens

1. Review your budget , if you don't have a budget is time to create one
2. Diversify your income
3. Pay down high interest rate
4. Open a high yield saving account
5. Create a meal plan
6. Speak to financial advisers

I'm inviting @josepha @pennsif @samuelernest