Inflation

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Inflation and Its Effects in Nigeria

Author: Razzak Osemobor
Date: January 22, 2026

Economically, inflation is a general increase in the prices of goods and services. Inflation is a global problem, but in some countries, it is not too noticeable because it is well managed by economic experts who study trends and recommend strategies for stability.

While value-added taxes are charged on items, these charges are generally well channeled for the purposes they are meant for. In some cases, however, they contribute to inflation. A stable economy should ensure that basic amenities like clothing, water, food items, and electricity are easily affordable for its citizens.

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How inflation affects the value chain

1. Operational cost: Manufacturers spend more to buy raw materials to produce commodities, which contributes to a hike in prices.
2. Demand: The demand for goods and services drops because of irregular increases in prices.
3. Supply: Manufacturers reduce supplies if demand falls. When this happens, they often adjust by producing budget-friendly items, which may be of lower quality.

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Nine effects of inflation as it applies to Nigerian society at present

1. Naira devaluation: The Naira is devalued. The highest denomination, which is 1,000, can no longer buy citizens a full meal at a restaurant — at best, a snack and a drink. Prior to subsidy removal, that same amount could buy five litres of Premium Motor Spirit (PMS) with some change left.
2. Telco costs: Many telecom users pay a lot for airtime and data, yet the data often does not last the full validity period. Services are not just about efficiency but about adopting cost-effective operations while ensuring that inflation is not passed on to users. From my experience, MTN is one provider where this is noticeable, but others might have a different opinion on this or complain about other service providers.
3. Business slowdown: Businesses slow down as sellers accumulate more stock due to overpricing, while consumers hold cash to survive instead.
4. New business start-ups: Some new businesses struggle to survive, while others shut down completely. For example, fintech agents face challenges as customers struggle with new stamp duty charges and other fees on transfers and withdrawals above 10,000 Naira, while agents contend with high operational costs.
5. Electronics affordability: Electronics have become increasingly unaffordable.
6. Food insecurity: Inflation worsens food insecurity, which can lead to poor health outcomes and malnutrition-related risks.
7. Basic needs: If human life is valuable, basic necessities should be affordable. Drugs have become expensive, and bills in some private hospitals are now outrageous.
8. Insecurity: Inflation contributes to higher crime rates. Many citizens live in fear due to the unrest caused by economic hardship.
9. Investment: Investors are hesitant to operate in an environment where inflation is not managed. One day, I walked into a Glo office and observed that most of their equipment was down including the air conditioners, except for a few machines used to attend to customers' requests. This slowed down response times and affected customer experience. I noticed they relied on a backup power supply likely solar-powered and hand-held devices, because using fuel for hours would have been too expensive when there was no electricity.

Conclusion

Inflation undermines a country’s stability and requires competent economic teams to ensure businesses thrive and all sectors perform well, thereby maintaining balance in the value chain.