Nigeria’s Consumer Price Index (CPI) increased to a record high of 18.6 percent year-on-year in December 2016. It is the highest reading in 11 years (since October 2005) as recorded in the Central Bank of Nigeria’s database. This is following a 18.5 percent increase in November of 2016. Note the alarming 93.8 percent increase from the rate in December 2015.
Surviving the rising consumer prices in Nigeria requires some deliberate strategies and actions to reduce the effect of inflation on one’s spending.
The CPI produced by the National Bureau of Statistics (NBS), measures the average change over time in prices of goods and services consumed by people for day-to-day living. It measures the inflation rate. The rising consumer prices in Nigeria are recorded highest in the cost of food, housing & energy, clothing & footwear, and transport. This is according to the CPI report by the NBS.
The rising inflation in Nigeria can be said to be driven by the two structural policies addressed by the Nigerian government some months back. These are the removal of petrol price subsidy and removal of the CBN foreign exchange peg.
With these policies, existing price controls were eliminated by the government, causing prices to rise to reflect and cover the underlying cost of production.
Inflation in Nigeria is in no doubt real, therefore, should not be ignored by any Nigerian consumer. Inflation greatly impacts your finances and your efforts at achieving a secured financial future. It can shrink your purchasing power and affect your standard of living. Therefore, this can put your family at risk. While we cannot control inflation as individuals, the following are three ways to survive and even come out of it better than we went in.
SURVIVING THE RISING CONSUMER PRICES IN NIGERIA
Here are strategies to adopt and survive the rising inflation in Nigeria.
Immediately Evolve and Adapt
Inflation is not just one of those trends or a fancy terminologies in the news. The rising inflation is real in Nigeria and it greatly affects the finances of its people.
The best way to beat inflation is to accept it and immediately evolve and adapt. Do things differently, make little changes and see the big difference they can make.
One strategy is to buy things in large quantity at the early stage or when you see the price is right, because the prices may go up even more. Buy only what you need to avoid waste.
The best strategy to manage your money at any time is to track your expenses. Even if you don’t track your expenses at any other time (although you should), it is one strategy that works best for adapting during inflation. Write your expenses down with the prices for each, then find areas and ways to cut costs. Eliminate the things you don’t necessarily need and focus on the ones you really need. To cut costs, look for the items you can substitute with alternatives.
For instance, if “Peak” milk is more expensive, substitute and buy “Nido” milk at a slightly lower price. Look for items that are priced unnecessarily high, buy a different brand that serves just the same purpose, but priced right. Search for coupons and shop with them. You may think the difference is not much, but they really add up. Small changes, big difference.
Turn the Challenges Into Opportunities
Surviving the rising prices in Nigeria requires that you turn the challenges into opportunities. Within any challenge lies an opportunity. The underlying principle behind the elimination of price control by the government is so that prices will rise to cover costs, which will in turn promote competition and efficiency. All things being equal, the competition and efficiency will cause the market to readjust bringing prices to equilibrium. What this means is that the market expects competition as a result of the rising prices, so let’s be creative!
If you are an entrepreneur, find ways to add value to your clients or customers. Consider offering services or products of different price points. This creates different options for your customers to choose based on their budget. The key is this: while a lot of people will be coming out of this economic crisis jobless, broke, and depressed, look for opportunities within the challenges and exploit them. You will thrive and come out on top.
Embrace Agriculture
Major price increases in Nigeria are recorded in the cost of food. Surviving the rising consumer prices involves finding ways to reduce the spending on consumer items. Why not consider growing your own food? Click To Tweet
At least some food items that you can easily grow on your own. Do you have a small area in your backyard? Turn it into a small farm or garden. Grow your vegetables, yam, cassava, fish, and other food items that you can easily grow. Agriculture is one way that can put food on the tables of millions of Nigerians to reduce the effect of the high inflation. This can help to achieve food security for millions of families, and reduce the overdependence on imported food items.
Take Advantage of the Uncertainty and Invest
This time of uncertainty presents opportunities for smart investors to enrich themselves and make fortunes. One strategy to successful investing is to wait for events that present the right investing opportunity. Inflation is an event! The key to making money in inflationary period is to hold investments that increase in value at the rate higher than the inflationary rate.
Historically, real estate, gold, silver, oil, stocks, and inflation-indexed bonds, fertilizers, to name a few are viewed as hedges against inflation, so get involved with these kinds of investments that perform well during inflationary period. Most people think that investing in commodities (gold, silver, oil) could be too technical. If you are not sure of your ability to invest in these areas, commercial real estate might be a good way to start, then when you are more comfortable, you can begin investing on commodities. Begin now, no matter how little. Invest for steady cash flow and you are on your way to beating Mr. inflation and building your wealth.
CONCLUSION
To survive inflation, do not wait for it to come, anticipate and plan ahead. If you haven’t planned for it, it is not too late, the strategies above are a good start. Accept, evolve, and adapt. Find ways to turn the challenges to opportunities, embrace agriculture and take advantage of the uncertainty and invest. Rather than waiting for your purchasing power to be diluted and put your family at risk, play your card right and thrive.
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Remember, it is possible to end poverty through financial education.
Victor Nwankwo from Abia state. This is inspiring and if properly implemented will surely go a long way in helping one out of this present economic woes.
Thank you Victor. The present economic crisis in Nigeria is something no one should take for granted. Everyone has a part to play. My goal is to inspire everyone to take action. Thanks for reading.