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N1,000 loses economic value on surging inflation

Nigeria’s highest naira denomination, N1,000 has lost its economic value on accelerating inflation. Nigerians are now looking at paying nearly N1,000 for key staples that just a few years ago would have cost half that.

Afolabi Mojeed, the breadwinner of a family of five, told BusinessDay that he has reduced the portion of food that his family consumes to adjust to recent economic realities.

“Early last year I could conveniently buy a loaf of bread and a derica of rice for a little over N1,000, but presently, just a derica of rice costs N1,000. Now we eat more beans because it is cheaper, but cook it on a charcoal stove to save gas,” Mojeed said.

Read also: Rising inflation, FX pain bite consumer firms as unpaid bills rise by 34%

Cooking gas scarcity is looming across the country as its price rises to an all-time high of N1,200 per kilogram (kg) from N750 barely two months after its speculations.

“1KG of gas is now sold at the cost of N1000, what are all these increases in the price of things in this country,” Ifeoma Chinasa, Lagos-based roadside noodles vendor, said.

“N1,000 is fast losing its value. A lot of things now cost nearly N1000. First, it was big loaves of bread, then cooking gas, diesel fuel, and even rice, I bought a derica of rice for N900.”

The federal government reforms such as the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, increased the cost of living of cash-strapped consumers.

The removal of the fuel subsidy tripled the petrol price to N617 from N184, causing public transportation providers such as buses, tricycles, and motorcycles to raise transportation fares.

Read also: Businesses to adopt cost-cutting measures amid rising inflation

On June 14, 2023, the Central Bank of Nigeria merged all foreign exchange markets into the Investors and Exporters window and reintroduced the willing buyer, willing seller model.

As a result, the official exchange rate increased from N463.38/$ to N759.99/$ as of Tuesday. At the parallel market, popularly called the black market, the dollar increased to N1,030/$1 from N762/$1.

The high cost of sourcing FX was one of the major factors that pushed Nigeria’s inflation rate to an 18-year high of 25.80 percent in August from 24.08 percent in July, according to the National Bureau of Statistics.
Food inflation rose to 29.34 percent, the highest in 18 years from 26.98 percent in July.

Market research by BusinessDay shows that a derica of rice is now sold between N800 – N900, with a bag of rice heading to N60,000 compared to N20,000 years ago, similarly fuel, diesel, and bread cost N580, N1000, and N1000 respectively.

Rice and bread are popular food items in Nigerian households, they increased in their price in recent years.

“Currently my brother’s proof of funds is almost N10 million, three times the value of mine last April,” Temitayo Awoga, a former banker said.

Awoga, who is now based in Canada, added that her permanent resident journey was cheaper compared to hers due the devaluation of the naira.

“The painful part of this situation is that we have to go through the black market at over N1,000/$1 because it’s difficult to get it in the bank,” she said.

And this still, is apart from the soaring rent and electricity prices hammering Nigerians.

The Central Bank of Nigeria is battling to get inflation back down to moderate levels from 24.80 percent which is responsible for much of the cost of living crunch for households and has hiked its benchmark lending rate four times this year to 18.75 percent.

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