Wednesday, September 06, 2017

What is inflation?

It shouldn't be too high, it also should not be too low.  1, 2, 3 % is very ok, it means that the price of something you buy today may be doubled after about 25 years or more.
Inflation rate in the G20 nations mid-2017
Source: tradingeconomics.com 

But let's say it's around 10% or 15%, that means that your money is being watered down very fast because things you buy for 1000naira now, try again in about 5 years and the price is about 2000naira.

Nigeria's inflation rate is now around 16 percent.  
It was far worse in the military regime more than 20 years ago when inflation exceeded 40%.
It was tamed to below 10% recently until it started to rise again about two years ago. 



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If you want a more technical explanation, HERE and HERE.

Nigeria Inflation Rate Notes  ||  Source: Inflation rate in Nigeria

In Nigeria, the Consumer Price Index (CPI) measures the change over time in prices of 740 goods and services consumed by people for day-to-day living. The index weights are based on expenditures of both urban and rural households in the 36 states. The most important categories in the CPI are Food and Non Alcoholic Beverages (51.8 percent of total weight); Housing, Water, Electricity, Gas and Other Fuel (16.7 percent) and Clothing and Footwear (7.7 percent). Transports account for 6.5 percent of total index and Furnishings and Household Equipment Maintenance for 5 percent. Education represents 3.9 percent of total weight, Health 3 percent, Miscellaneous Goods and Services 1.7 percent and Restaurants and Hotels 1.2 percent. Alcoholic Beverages, Tobacco and Kola account for 1.1 percent of total index, Communications for 0.7 percent and Recreation and Culture for the remaining 0.7 percent. This page provides - Nigeria Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Nigeria Inflation Rate - actual data, historical chart and calendar of releases - was last updated on September of 2017.
 
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