Inflation in Nigeria: Causes, Control & Solutions

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Inflation in Nigeria

Inflation is a worldwide phenomenon but the rate varies from country to country.

Nigeria has been experiencing a high rate of inflation estimated to be well over 45%. Despite the various measures adopted to control inflation it has defied solutions.

Inflation in Nigeria
Inflation in Nigeria

Causes of Inflation in Nigeria

  • The causes of inflation in Nigeria are not different from the ones in most Third World countries. They include:
  • Excessive government spending and use of budget-deficit.
  • Rapid increases in the cost of production.
  • Poor storage facilities.
  • Inadequate distributive system.
  • Low domestic productivity in industry and agriculture.
  • Increases in the prices of imported goods and services.
  • Frequent wage increase. This leads to excess demand for certain goods and services.
  • Excessive expansion of bank credits.

Reasons for failure of measures aimed at controlling inflation in Nigeria:

  • Difficulty in cutting down government expenditure due to the increasing demand for better infrastructual facilities and the need to create more employment opportunities.
  • Ineffective price control due to bribery and corruption, poor transportation facilities etc.
  • Inability to control wages: These result in frequent industn’al actions by workers.
  • Poor distributive system which creates bottlenecks in the distribution of goods and services.
  • Poorly developed money and capital market which renders the use of monetary policy ineffective.
  • Inability to increase domestic output due to bottlenecks in production.
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