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Nigerians more financially miserable as Misery Index rises
Nigeria’s Misery Index rose to 62.79 in July-2022 compared to 59.4 in December 2021. This represents an almost 6% decline in our Misery Index.
The Misery Index is an economic indicator which aims to keep track of a combination of various economic data to help assess the degree of economic hardships for ordinary folks in an economy.
To most economists, the importance of this metric is that economic hardships need to be tracked and addressed specifically to avoid risk of social unrest at some point.
Nigeria’s inflation rate in June 2022, surged further to 18.6% compared to 17.71% recorded in the previous month. Nigeria’s inflation has climbed to its highest level in 65 months (over 5 years).
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Nigeria’s high inflation rates can be linked to excessive money supply and weak GDP growth which has been further compounded by energy price spikes.
Energy price spikes can be attributed to external shocks to the economy, such as disruptions caused by the Russian-Ukraine war.
The Central bank’s failure in combating rising inflation means that Nigerians’ purchasing power has been weakened even further.
Nigeria’s unemployment rate which was last published by the Nigerian Bureau of Statistics (NBS) in 2020 outlined 33.3% unemployment rate
This compares to 27.1% recorded as of Q2 2020, indicating that about 23,187,389 (23.2 million) Nigerians remain unemployed, according to the last released labour force report published by the National Bureau of Statistics.
More recent data will be welcome, however, anecdotal data suggests unemployment rates remain high causing a large number of Nigerian youths to seek greener pastures overseas.
The Central Bank of Nigeria is now attempting to adopt a hawkish stance to reign-in run-away inflation. Specifically, in recent times, Nigeria’s central bank has increased rates twice in 2022 to now 14%
The Nigerian economy increased by 3.11% in real terms in Q1 2022, following a 3.98% year-on-year rise in the previous quarter, marking the sixth straight quarterly growth in the Nigerian economy since the covid-induced recession in 2020.
Although Nigeria appears to be growing, this growth is insufficient to compensate for the deficiencies of other economic indicators used in the misery index calculation.