Nigeria crisis – level 3
In August, Nigeria’s annual inflation rate reached a staggering 25.8%, marking an 18-year high.
This alarming increase is attributed to President Bola Tinubu’s removal of a long-standing petrol subsidy and the end of exchange controls in May. These reforms led to price spikes across various sectors, including food and transportation, causing public discontent and union threats of strikes. The inflation has been on an upward trajectory for eight consecutive months, exacerbating the cost of living crisis sparked by these reforms.
Economic analysts point to factors like the depreciation of the Nigerian naira, higher fuel and food prices, increased logistics costs, and money supply growth as the key drivers of inflation. The central bank, which raised rates by a smaller-than-expected margin in July, is expected to make another rate decision on 26 September, and some analysts anticipate a more radical stance. Food inflation, a significant contributor to overall inflation, rose to 29.34% in August.
Difficult words: subsidy (a sum of money granted by the state to help an industry or business), discontent (dissatisfaction), trajectory (the path), exacerbate (to make a problem or negative situation even worse).
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What measures does the Nigerian government need to take to address the current cost of living crisis caused by the recent reforms?
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