Nigeria’s cost of living drops as gas prices drop by 30%

Households experience relief as gas prices drop by 30%

Prices of Liquefied Petroleum Gas (cooking gas) in Africa’s biggest economy fell for the first time in a year in May, offering an unexpected and brief respite to households.

The price of a 12.5kg cylinder of cooking gas has dropped by 30 percent owing to lower crude oil prices and a decline in global gas prices.

In a survey of major cities in Nigeria, the price of cooking gas is trending downwards to N7,000 currently from N10,000 two months ago.

This a development that will ease some of the burden on cash-strapped households, who have been dealing with accelerating inflation since last year coupled with the recent hike in fuel prices as a result of subsidy removal.

“The recent drop in the prices of cooking gas is a big relief for low-income households like mine. Prices of everything are just going up and this is the only drop we have seen in the last two years,” said Mary Chukwu, a food vendor at Ketu bus stop.

“It is also helping us cushion some of the effects of the recent spike in fuel prices. If not, the shock and impact would have been high,” Chukwu said.

Abosede Ademola, a food vendor at Mile 12 Market said she was glad when her supplier informed her of the drop in prices of cooking gas.

“I was really happy when he told me because every time I ask him to supply me he only tells me the price has increased,” said Ademola.

“You know prices keep going up daily. You can’t even go to the market with a specific amount and be sure of what you will buy with it because of the constant price surge, so this is a big relief for us,” she said.

Accelerating inflation and dwindling household incomes is eroding consumers’ purchasing power. Nigeria’s inflation at 22.22 percent in April, the highest in 17 years, far outpacing wage growth, according to data from the National Bureau of Statistics.

The situation has continued to worsen since the beginning of the year with prospects of more due to the recent hike in fuel prices.

Food prices are up 150 percent, and the costs of fuel and diesel have jumped by 174.6 and 160 percent respectively year-on-year, according to BusinessDay’s market checks.

With food inflation hitting 24.6 percent, the key driver of Nigeria’s core inflation as over 90 percent of the country’s working population spends 60 percent of their income on food and related expenses, analysts say.

The surge in food prices has led to a 12 percent increase in household consumption expenditure to N27.3 trillion in the first half of 2022, the highest in five years, from N25.3 trillion in the corresponding period of 2021, according to NBS.

The situation has made many Nigerians poorer than they were in 2021, with 63 percent of the population (133 million) suffering from multidimensional poverty.

“It is really hard in the country and any form of drop is a big deal for consumers right now,” Amarachi Amos, a mother of two who was at Ketu Market, Lagos to make a purchase said.

“This will ease our suffering, especially for fixed-income earners,” Amos said.

Credit: Businessday.ng