Year in Review: Petrol Subsidy Subdues Household Incomes, Causes High Inflation in 2023
- The removal of petrol subsidy by President Bola Tinubu in 2023 unleashed untold hardship on Nigerians
- The subsidy removal is mainly responsible for high food inflation in the country, which has affected household incomes
- Nigeria is reportedly a hotbed of food insecurity in the world, alongside Afghanistan, Somalia and Yemen, among others
Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.
“Subsidy is gone forever.”
This famous pronouncement by President Bola Tinubu on the day he was sworn in as Nigeria’s president would go on to unleash other unforeseen issues in the Nigerian economy.
Almost on the same day that Tinubu announced the petrol subsidy removal, some people said the lives of Nigerians were turned irreversibly around.
Petrol prices increase from N189 per litre to N630 per litre
The statement, which did not say the subsidy had been removed immediately, made petrol stations hike their prices.
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“I was at the petrol station trying to get petrol, which showed N189 per litre. When it got to my turn, the petrol attendant said I had to pay N480 per litre while those who bought before I did pay far less,” Chidi Ikeh said he was at the station that day.
A few days after the announcement, the Nigerian National Petroleum Company Limited (NNPCL) announced price changes for its various retail outlets, reflected in other nationwide petrol stations.
So, the petrol price went from N189 per litre to over N700 per litre at some point before settling at over N600 per litre.
Source: Getty Images
Subsidy removal causes high food inflation
But the adjustment in petrol price did not just affect how much Nigerians bought the product. It affected how much they purchased everything, including basic staples such as bread, rice, garri, and other household items.
The removal of petrol subsidies was reportedly blamed for the rise in inflation, which stood at 22.4% as of May 2023.
As of the time of writing, headline inflation for November 2023 is at a whopping 28.20%, the highest in 15 years.
The rise in inflation quickly eroded household income as food prices skyrocketed in many parts of the country.
Traders blamed the high cost of transportation for the rise in food inflation.
Experts blamed the rise in food prices on insecurity in parts of the country.
Nigeria is a global hotbed of food insecurity
The World Bank said Nigeria is a hotbed for global food insecurity, along with Afghanistan, Somalia, South Sudan, and Yemen.
The bank reported in its 2023 Global Hunger Index that Nigeria ranks 109th out of 125 countries, scoring 28.3, which indicates a severe hunger level.
In 2022, the country ranked 107th out of 113 countries, with a score of 42.0, showing that 12.9% of the global population in extreme poverty was found in Nigeria.
Food insecurity in Nigeria has spiked by 133% as poverty permeates, which is caused by worsening insecurity, climate change, and the impact of fuel subsidy removal.
According to the World Bank, these factors affected the ability of farmers in Nigeria to produce enough food to meet the growing demand of Nigerians.
In June 2023, 19 farmers were killed in Borno State, while the United Nations said 25 million Nigerians are at risk of food insecurity.
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Legit.ng reported that The National Bureau of Statistics has revealed the list of states with the highest cost of food amid the worsening cost of living for Nigerians.
In its latest consumer price index report, NBS disclosed that food inflation, which measured the price movement of food items, rose in November 2023 to 32.84% on a year-on-year basis.
The November inflation figure is 8.72% points higher compared to the rate recorded in November 2022, which stood at 24.13%.
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Source: Legit.ng
