INFLATION RATE

The inflation decreased over the last 12 months, but very

slowly. People are complaining about inflation and its
effect on their living since President Muhammadu Buhari
came to power in 2015.
The Consumer Price Index increased 0.70% in October,
2018 as compared to September. However, annual inflation
rate in Nigeria fell to 11.26% in October 2018.
But, the overall inflation rate is around 12.4% which is well
above the global average inflation rate i.e 3.78%.
Factors leading to such high inflation rate:
• Oligopolistic or monopolistic markets may
push the prices up by practicing mark-up
pricing.
• Shocks such as exchange rate depreciation
or an unexpected increase in price of
crude oil can push the inflation upwards.
• Labour unions using the market power
demand for increase in wage which are
more than the productivity profits.

Prices decreased for food & non alcoholic beverages (13.24%), namely food, clothing & footwear, transport,
furnishings & household equipment, education and other goods & services.
On the other hand, cost increased faster for housing & utilities, health, restaurants, recreation &
communication.
 UNEMPLOYMENT
Factors leading to high unemployment rate:
• High instability and corrupt political environment: This
resulted in the mismanagement of the funds/resources
supposed to be used for the creation of job opportunities.
Nigeria scored 27 points out of 100 on the 2017 Corruption
Perceptions Index reported by Transparency International.
[0 : most corrupt to 100 : least corrupt]
• Lack of quality education
• Higher tax rate
• Lack of infrastructure
• High Population Growth: There has been an increase in
the growth of the labor forces along with the inadequate
supply of jobs.

• Unemployment Rate in Nigeria increased to 18.80 percent in the third quarter of 2017 from 16.20 percent
in the second quarter of 2017.

• Estimated overall youth unemployment rate in Nigeria was at 13.41 percent in 2017.

• Global rate of unemployment was 5.52 percent in 2017.

• Nigeria’s employment rate is well above the global unemployment rate as of 2017.
 SOLUTIONS FOR UNEMPLOYMENT
Lowering the Tax rate
• Reduces cost of production which in return reduces the cost of goods and
services.
• Increase in demand for goods and service will increase money supply.
• Increase in disposable income will increase purchasing power of
individuals.
• By increase in purchasing power, consumers will buy more due to increase
in demand will encourage job growth.
• Industries will have more money to spend on new innovations, increase in
productions and invest into new ventures which will result in growth in
employment opportunities.
• In long run due to increase revenue growth of companies government will
earn tax revenues which can be used in improving public infrastructure and
creation of jobs.
• Attracts foreign investors and in bringing new industries into the country.
Importance to Agriculture
• It plays a major role in economy of any country.
• People should be educated about modern techniques and how they can
implement them in increasing the productivity of their agricultural lands.
• Youngsters should be motivated to take up agriculture as a profession. This will
reduce the rate of unemployment and will motivate people towards self
employment.
• Subsidies and lower interest rate loans should be given to farmers.
• Price monitoring and market stability will encourage people to take up
farming.
Improvement in Educational System
• Improving the quality of education by including technical and vocational
courses in it’s curriculum.
• Government should focus on producing more skilled labours.
• Integration of entrepreneurship into secondary and higher education.
• Entrepreneur skills should be taught to individuals by including them in
technical courses.
• Employment programmes conducted by government to produce more
skilled worker who can employed by corporates.
• Periodic review of technical education system and improvements that can
be made to better the skills of labours.
Other solutions
• Encourage investing in industrial sectors this will help in capital formation and
growth of small and medium scale industries which will in turn increase
employment.
• Interest rate on loans should be reduced to increase availability of funds for
entrepreneurs .
• Corruption being one of the major problem government should make financial
system more transparent.
• Improving infrastructure facilities such as electricity, transportation,
communication system will ease in doing business and attract foreign companies
to do business in Nigeria.
 SOLUTIONS TO CONTROL INFLATION
Monetary Policy
• Increase in interest rate on borrowing will discourage businessman to avail
credit which in turn reduces the money supply in economy.
• Due to increase in interest rate people will start saving money instead of
investing which will help controlling money supply.
• Central government should start selling bonds to banks this will help in
reducing credit creation capacity of commercial banks.
• Control of money supply will help curbing inflation.
• Higher rate of interest by banks will lead to increase in exchange rate which
will help in reducing the cost of imports, demand for the exports.
• Having Inflation target will help in controlling the inflation as their will less
expectation of rise in inflation.
Fiscal policy
• Government should increase taxes. This will reduce the disposable income
with people which will reduce their expenditure and in return money
supply can be controlled.
• Increasing taxes on private business will reduce their spending capacity.
• Government should reduce it’s public expenditure.
• Increase in tax revenues and decrease in transfer payments will help in
budget surplus which can be used to pay off the trade deficits.
• Increasing imports and reducing exports can control in overvaluation of
money.

Other solutions
• As the demand for goods and services increase this leads to inflation to control inflation we should increase the production capacity. It will help in increasing
employment opportunities.
• Control on wages paid to employees.
• Encouraging individuals to save money by encouraging them to save money on provident and pension funds.
• Both Monetary and fiscal policy should be implemented to control the inflation.
• Importing only essential goods to meet the necessities.
• Government control on production and distribution of goods.