Cost of living represents the quantum of money required to sustain a desired standard of living, particularly meeting basic needs such as food, healthcare, housing, and education. It is primarily determined by government economic policies, especially relating to direct taxes, which impact disposable income and interest rates, which affect the cost of production; demand and supply of goods, cost of utilities including transportation, electricity, telecommunication, school tuition and other fees, cost of medicine and healthcare services, et cetera. The general macroeconomic factors affecting the cost of living are inflation rates, labour market salaries and wages, and the strength of the local currency in terms of its exchange rate, particularly for import-dependent countries.
Monitoring and improving the cost of living through appropriate economic policies to impact positively on the standard of living is important for a caring government at all times, but more important in an election year, because a high cost of living or worsening standard of living can and do affect negatively the success of the ruling government. That is why a truly democratic government, whose success at the polls depends on the votes of the electorate rather than results’ manipulation, keeps the inflation rate in particular, very low in an election year to be able to maintain a good standard of living.
Inflation is a common phenomenon all over the world and a common language among citizens globally. As far as citizens are concerned, inflation is their enemy, and the government must work hard to curb it. It is not only economists who understand the relationship between inflation and standard of living or dread the effects of inflation on living conditions. We are all presently witnessing how inflation has kept our lives away from enjoying the commodities we love to eat, wear, or have for the fun of possessing them. An increase in the prices of bread or such common food items has destroyed or toppled governments in many countries. It pauperises living conditions, thereby making people exist rather than live. Inflation that can make a government lose its ground can equally prevent a sitting government from winning an election. That is the stage we are in Nigeria today!
When Nigerians say they are suffering, it is the effect of current inflation, which has turned good salaries or earnings into peanuts. When those notable politicians said they were hungry, it was because they had found out that the humongous wealth they acquired while serving in government was reducing fast, since they now had to pay for their living, and the free state money had ceased. The cost of living is rising fast, or the standard of living is declining quickly.
We have heard of the rise in consumer price inflation to 2.8 per cent in the UK in April 2026, and in the United States, it is 3.8 per cent, in Ghana, it is 3.4 per cent, and 15.69 per cent in Nigeria, just like Rwanda, 13 per cent and Egypt, 14.90 per cent. Today, people are saying that living in Ghana is better than in Nigeria.
It is because of the level of inflation. If there is an election today, the present government in Ghana is more likely to remain than the Nigerian government for the same reason of inflation or hardship in living. Thus, the government has to start working on how to reduce inflation using the desired economic policies.
As we move towards the election, the governments will start implementing policies that will put more money into the economy. The government is likely to start implementing, in earnest, cash empowerment policies, like Buhari’s “Trader Moni”, giving money to traders, small business contractors, and other small and medium-scale businesses, which I refer to as ‘official electoral bribery’ to win over the populace. This policy has serious implications for fighting inflation. A large amount of such funds might go into consumption rather than production.
In monetary policy parlance, there is inflation targeting as a monetary framework. It is a situation in which a central bank uses monetary policy to keep inflation below 10 per cent. But keeping inflation below 10% in Nigeria is not the work of the central bank alone. There are many sources of inflation. Price level can rise as a result of an increase in interest rate, a decrease in output, and a decrease in money demand for a given output and interest rate. This means that inflation can be caused by monetary and structural factors. That is the kind of inflation in Nigeria.
Therefore, the Central Bank of Nigeria and the Ministry of Finance, with its allied ministries, have to work together to bring down inflation gradually towards the coming election to bring down the cost of living and raise the standard of living. The government might not control prices directly if it does not want to do so. Since we know that the current price hike is largely caused by energy prices arising from the Middle East-US war, the government can sell crude oil to local refineries like Dangote at below the world price and temporarily adjust its taxes. It can then give directives to the refineries not to sell fuel above a specified price. These will be temporary measures that can be halted or adjusted with time.
The Nigerian economy, like that of many developing countries, cannot be left in the hands of market forces. It requires constant intervention to prevent the vagaries of market failure. The need to make life meaningful for Nigerian citizens is to reduce inflation drastically, and the starting point is the control of energy prices, which have serious effects on other prices, particularly transport and food prices.
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