From Data to Action: Strategies to Mitigate Inflation in Nigeria

The impact of inflation is deeply personal, affecting the daily lives of Nigerians in overwhelming ways. Conversations often turn to complaints about rising food prices, transportation costs and other basic necessities, revealing the pervasive stress and anxiety caused by the rising cost of living. This financial struggle underscores the urgent need to address inflation comprehensively.

Several interconnected factors are driving inflation in Nigeria. Supply chain disruptions, due to infrastructure challenges and logistical bottlenecks, are significantly increasing the cost of goods and services. Exchange rate volatility is driving up the prices of imported goods and raw materials, which is further pushing up domestic prices. Fuel price deregulation and the removal of subsidies are increasing transportation costs, which directly impacts consumer prices. In addition, uncertainty in various regions is disrupting agricultural production and economic activity, causing supply shortages and subsequent price increases. Government policies, including fiscal measures and regulatory decisions, are inadvertently exacerbating inflationary pressures.

The latest statistics from the National Bureau of Statistics (NBS) indicate that food inflation in Nigeria is on the rise. As of June 2024, food inflation has reached 40.66%, the highest on record after a 40.53% increase in April. Historically, food inflation in Nigeria has averaged 13.42% from 1996 to 2024, with the previous all-time high of 40.66% in May 2024 and the previous low of -17.50% in January 2000. Policymakers can use real-time agricultural data to predict shortages and implement measures such as import adjustments or subsidies to stabilize prices.

According to the March 2024 NBS Transport Fare Watch, the average fare for a bus ride in the city rose 1.85% month-on-month to N969.32 and 49.55% year-on-year, while intercity bus fares rose 2.14% month-on-month to N7,152.97 and 79.17% year-on-year. Airline fares on specific routes rose 1.10% month-on-month to N88,964.86 and 18.96% year-on-year. These rising costs contribute significantly to inflation as inefficient supply chains lead to delays and losses, resulting in higher costs for consumers. Using big data to optimize supply chains can identify bottlenecks, predict demand, and streamline logistics. Streamlining logistics with big data can help mitigate transportation costs and curb inflation.

The Central Bank of Nigeria’s monetary policy announcement appears to be a proactive response to current economic realities. While these measures are beneficial for long-term economic stability

and growth, are associated with short-term challenges, such as higher borrowing costs and potential impacts on small businesses. Complementing these measures with supportive fiscal policies, effective implementation of agricultural programs, and continued monitoring of domestic and global economic conditions will be important. Balancing short-term economic challenges with long-term stability goals is key to achieving positive outcomes for Nigerians.

Inflation disproportionately affects low-income households. Big data can help design and implement targeted social programs to support those most affected. By analyzing demographic and economic data, the government can ensure that subsidies and aid reach the right people, mitigating the impact of inflation. The NBS indicates that 40% of Nigerians live below the poverty line. Data-driven social programs can provide relief to these vulnerable groups, ensuring that inflation does not push more people into poverty.

A critical problem exacerbating the impact of inflation in Nigeria is stagnant wages and incomes. Despite rising living costs, wages have not kept pace, leaving many Nigerians struggling to meet their basic needs. By analyzing employment and wage data, policymakers can identify sectors where wage growth is lagging and implement targeted interventions. Data-driven policies can advocate for equitable wage adjustments in both the public and private sectors.

The intersection of big data and economic policy offers a promising path forward for Nigeria. By harnessing the power of data, we can not only understand the complexities of inflation but also implement effective strategies to combat it. This approach requires collaboration between government agencies, private sector partners and academic institutions to build a robust data infrastructure and develop the necessary analytical skills.

Nigeria is at a crossroads in the face of rising inflation. The path to economic stability and growth is paved with data-driven insights and informed decision-making. By embracing big data, we can tackle inflation head-on, ensuring a brighter and more prosperous future for all Nigerians. As we move forward, let the power of data inspire us to transform our economy and improve the lives of our people. Together, we can turn the tide and build a resilient, inflation-free Nigeria.