Of Inflation and Purchasing Power

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Chinedu Eze

Given the trajectory of the impact of inflation on consumer purchasing power, it is likely that the year 2026 will face economic obstacles that have impacted 2025.

Chief Economist, SPM Professionals, Dr. Paul Alaje, who gave an insight into the inflationary trends in Nigeria, said inflation would persist in 2026 because it had already been rooted in Nigeria’s security challenges, causing disruption in production and currency instability.

Alaje, who was Guest of Honour at Lagos Country Club Business Forum, which held recently in Lagos, made a presentation on Inflation, Cost of Living, and Consumer Purchasing Power, where he alluded to the rising cost commodities across all sectors of the economy. According to him, such rise in cost of commodities will persist in 2026, and will significantly affect household wellbeing, noting that inflation is the reason for the general rise in prices over time, and has eroded values of money, impacted savings, consumption, and investment.

Alaje identified types of inflation in Nigeria to include structural inflation, cost-push inflation, imported inflation and exchange rates because of Nigeria’s high dependence on imported goods.

“As insecurity persists into 2026, it will impact on food production and distribution, which indicates that costs may not come down in the foreseeable future; unless security improves in the country.

“There are structural challenges at the core, caused by low productivity vis-a-vis consumption level, limited manufacturing depth and dependence on imported essentials. In the area of logistics, there is higher transport cost across states, checkpoints, division, and risk premiums, food inflation heavily influenced by insecurity,” Alaje said.

According to him, there is also the challenge of power supply inconsistency, high generator and diesel dependence and rising operational expenses for business.  There are multiple taxes, which inflate prices, causing regulatory bottlenecks that raise compliance costs and governance inefficiencies reflecting in market prices.

These factors, he said, would impact on households because they reduce purchasing power, forcing citizens to make adjustment on consumption habits and expose citizens to greater income insecurity. This also impacts on businesses, giving rise to margin compression, reduction in capacity expansion, as businesses shift toward survival-driven strategies.

Households already in the survival mode will have to prioritise essential spending, increase financial planning discipline and seeking additional income streams to sustain their lives, Alaje added.

According to him, to ameliorate the situation, government macroeconomic priorities should strengthen agriculture value chains, improve security architecture, improve power supply and also adopt policy consistency as growth catalyst for the economy.

Alaje however expressed optimism about the future of the country, noting that Nigeria’s strength lies in the young, talented population, entrepreneurial energy and large domestic market.

“Challenges are real but not insurmountable, right policies can unlock significant growth, Nigeria has the capacity to rebound strongly,” Alaje further said.

Also, in his remarks at the forum, the Commissioner, Ministry of Wealth Creation and Employment, Lagos State, Akinyemi Ajigbotafe, said inflation eased in October 2025 from 18.02 per cent to 16.05 per cent, even though cost of living is still high.

“Food prices have dipped to 13.12 per cent year-on-year, but daily meals are now a calculated sacrifice. Ladies and Gentlemen, inflation in Nigeria is no abstract force; it is the thief in the night that steals from our collective future.

“In Lagos alone, where our state’s economy rivals that of the entire nation’s economy, the ripple effects are acute rising rents, transport fares, and food costs have compressed real incomes,” Ajigbotafe said.

Nevertheless, the commissioner said despite the storm, there would be hope because “we see glimmers of resilience, National GDP growth holding at 3.98 per cent in March 2025, a proof of our adaptive spirit.”

“The question before us is not just “Why Inflation?” but “How do we adapt, innovate, and thrive? Ministry of Wealth, Creation, and Employment in Lagos State is mandated to initiate, formulate, and execute policies that build value chains for sustainable livelihoods. Governor Babajide Sanwo-Olu’s T.H.E.M.E.S+ Agenda has continuously championed adaptive strategies that directly counter inflation’s bite by boosting employment, skills, and entrepreneurship, turning vulnerability into velocity,” he said.

He disclosed that the Lagos State Government has empowered Lagos residents through the Graduate Internship Placement Programme, vocational centers, the state’s ICT skills training for 200 unemployed youths, equipped participants with cutting-edge digital tools to access remote work and gig economies, as well as specialised hubs like the new Leather Hub in Mushin.

“These initiatives not only create jobs but also enhance earning potential, directly bolstering consumer purchasing power,” the commissioner said.

He also disclosed that through the Lagos State Employment Trust Fund (LSETF), government has disbursed billions of naira in low-interest loans to small businesses and start-ups, enabling them to scale amid rising costs,” Ajigbotafe said.

He also observed that taking cognizance that 70 per cent of inflation stems from food, “we are scaling job registration centers and labour exchange programs across Lagos’s five divisions (IBILE).”

“We understand that collaborations with community-based organizations and the organized private sector promote inclusive hiring, ensuring women, rural migrants, and informal workers, all of which are often hit the hardest by cost spikes.

“These strategies are adaptive because they are proactive, fostering diversification, innovation, and equity. They align with national efforts like the rebased CPI for more accurate tracking and CBN’s recent rate adjustments, but they are peculiar to Lagos’s dynamism. With these interventions, we have not just eased individual burdens, we have injected liquidity into communities, stabilising demand and curbing inflationary spirals”, he added.

In his remarks, the President of the Lagos Country Club, Mr. Seyi Adewunmi, emphasised the need to uphold the club’s founding values of unity, family, and continuity.

“The idea of Lagos Country Club is for the club to continue in perpetuity. The vision of the forefathers would exist endlessly. This club used to be a corner where pilots hung around before flying out of Nigeria. Eventually, they got this place as a permanent location, and ever since, it has become a beehive of sporting and social activities—a fantastic platform for networking,” he said.

He stressed that the club must evolve with society and remains governed by its constitution:

“Once you have a constitution that is solid, it guides the behaviour, the conduct of everything that we do around here. The constitution is very superior to every member here,” he added.

The Lagos Country Club Business Forum attracted high end personalities from all walks of life who graced the occasion.