Inflation, the Naira, and the Everyday Nigerian Struggle

By Obamodi Oluwadamilola Faith

You don’t need a degree in economics to understand Nigeria’s inflation crisis. A simple visit to any local market tells the story more clearly than charts or policy papers ever could. Prices change almost daily, traders apologise even as they increase costs, and shoppers watch helplessly as their income loses value in real time. What Nigerians are experiencing is not just rising prices, but a dangerous feedback loop between inflation and the steadily weakening naira against the US dollar.

When inflation rises, the naira loses purchasing power. In plain terms, the same amount of money buys less today than it did yesterday. As food, transport, rent, and basic services become more expensive, individuals and businesses instinctively seek ways to protect their savings. Many turn to the US dollar, widely perceived as a safer store of value. This flight to “safety” increases demand for dollars and further erodes confidence in the naira, pushing its value down even more.

Nigeria’s heavy dependence on imports worsens the situation. Inflation raises the cost of local farming, manufacturing, and transportation, making it harder for domestic producers to compete. As a result, the country relies heavily on imported food, fuel, machinery, and raw materials. But foreign suppliers do not accept naira; they demand dollars. Importers therefore flood the foreign exchange market in search of scarce dollars, intensifying pressure on the currency and deepening the naira’s decline.

Inflation also quietly scares away foreign investment. Investors are cautious about committing funds to an economy where rising costs can quickly wipe out profits and currency volatility can erode returns. When foreign investors stay away or withdraw existing capital, fewer dollars enter the system. This scarcity drives the exchange rate higher, making the dollar more expensive and the naira weaker. Even when the Central Bank intervenes by releasing foreign reserves, the effect often feels temporary—like trying to quench a raging fire with a bucket of water.

Nigeria is therefore trapped in a vicious cycle. Inflation weakens the naira. A weak naira makes imports more expensive. Costlier imports fuel further inflation. Add insecurity, high transport costs, and unstable fuel prices, and the pressure on households becomes overwhelming. This cycle explains why many Nigerians are struggling to cope with rising living costs while watching their currency steadily lose value.

Breaking free will require more than short-term interventions or reactive policies. It demands sustained efforts to strengthen local production, reduce import dependence, restore investor confidence, and stabilise the macroeconomic environment. Above all, it requires policies that give the naira back its dignity—so that Nigerians’ hard-earned money begins to work for them, rather than against them.

Obamodi Oluwadamilola Faith is a Corps Member serving at PRNigeria. She can be reached via [email protected]