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Inflation eats up 41% of average worker’s salary
A new report by Afrinvest (West Africa) Limited, a wealth advisory firm, has revealed that Nigeria’s rising inflation rate has led to a 41% erosion of the N30,000 monthly minimum wage since 2019.
The report titled ‘The Cost of Nigeria’s Spiraling Inflation Rate on the Average Households’ was released on Tuesday.
In the report, it was stated that the country’s macroeconomic fundamentals have been under significant pressure for over two years, and the inflation rate had adversely affected the purchasing power of the average household, resulting in a significant increase in the share of real disposable income allocated to final consumption expenditure.
The report highlights that the purchasing power of households with fixed earnings, such as those earning the minimum wage of N30,000, has decreased by more than 40% since 2019 due to the inflation scourge.
It notes that since the national minimum wage was raised to N30,000 from N18,000 in 2019, the headline inflation rate index has risen by about 68.3ppts from 2019 year-end to 517.39 points in February 2023.
READ ALSO:Nigeria’s inflation rate hits 21.91% amid cash crunch
The report also estimated that the purchasing power of the average household has been eroded by 40.6%, leaving consumers worse off in real terms compared to pre-2019.
Afrivest report noted further that the average inflation rate reading has worsened to 18.8% in 2022, due to additional pressure from the global supply chain stoked by the war in Eastern Europe.
The report concludes that a modest upward review in the national minimum wage rate, combined with a concerted effort to boost output levels in the near term, would be crucial in preventing more households from falling below the poverty line.
It also emphasizes that adopting these measures would help Nigeria mitigate the impact of the pressured macroeconomic fundamentals and improve the living standards of its citizens.
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