Inflation, the Naira, and the Everyday Nigerian Reality

By Obamodi Oluwadamilola Faith

You do not need an economics degree to grasp Nigeria’s inflation crisis. A walk through any market offers a clearer lesson than a classroom. Prices change almost daily, traders struggle to explain the increases, and shoppers leave with fewer items than their money once allowed. What Nigerians are facing is not just inflation in theory, but a lived experience tied closely to the weakening of the naira against the US dollar.

When inflation rises, the value of the naira quietly erodes. The same amount of money buys less food, pays for less transport, and covers less rent. As the cost of living climbs, households and businesses look for ways to protect their savings. Many naturally turn to the US dollar, widely perceived as more stable. This shift in behaviour increases demand for dollars while reducing confidence in holding naira, placing further pressure on the local currency.

Nigeria’s reliance on imports deepens the problem. Rising inflation makes local production more expensive—farmers pay more for inputs, manufacturers face higher energy and transport costs, and businesses struggle with logistics. When domestic production becomes costlier or less competitive, the country leans even more on imported goods, from food to industrial raw materials. But global trade is conducted in foreign currencies, not naira. Importers therefore compete for limited dollars, pushing up demand and weakening the exchange rate.

Inflation also discourages foreign investment. Investors are cautious about economies where costs rise unpredictably and exchange rate instability threatens returns. When foreign capital slows or exits, the inflow of dollars declines. This further tightens supply in the foreign exchange market, making the dollar more expensive and the naira more fragile. Central bank interventions may offer temporary relief, but without broader economic stability, such measures often feel insufficient.

The result is a cycle that feeds on itself. Inflation weakens the naira. A weaker naira makes imports more expensive. Costlier imports push prices up further, worsening inflation. Layered onto this are insecurity, high transportation costs, and energy price volatility, all of which amplify production expenses and consumer hardship. For ordinary Nigerians, the outcome is a steady squeeze on income and purchasing power.

Breaking this cycle requires more than short-term adjustments. It calls for sustained efforts to boost local production, improve infrastructure, enhance security, and restore investor confidence. When domestic industries are stronger and the economy is more stable, demand for foreign currency eases, and the naira stands a better chance of regaining strength.

Ultimately, stabilising prices and strengthening the naira is not just a macroeconomic goal. It is about restoring the value of people’s earnings and ensuring that hard work translates into real security for families. Until that happens, inflation will remain not just an economic term, but a daily burden carried by millions.sx

Obamodi Oluwadamilola Faith is a Corps Member serving at PRNigeria.