As expected, the continuous increase in inflation in Nigeria is driven by depreciation of the foreign exchange rate. This in itself was occasioned by the inability of the country to earn foriegn Exchange as it used to.
The low and continuous fall in the price of crude oil in the international market which later picked up in February 2016 after reaching a very low price of 30.66USD per barrel in January 2016 and the continuous vandalization of oil pipeline in the niger-delta region of Nigeria which also brings the nation crude oil production to a very low ebb of 1.5million barrel in August 2016 was the major bane of the Nigerian economy in the year 2016. This pushes inflation rates to an all time high of over 18% year on year in December 2016.
The Nigerian economy which is highly import dependent was badly affected by its inability to earn enough foreign exchange to fund its importation of raw materials for production, plant and machineries for its few industries and consumer goods for consumption. This resulted in huge job losses during the year as most multinationals have to shrink their work force as a result of the economic realities that the country was faced with. The unemployment rate rises up to as high as over 13% in October 2016.
Here are the trend in the major economic indicators in year 2016.
The inflation rate increased steadily during 2016. Food prices increase from 11% January to over 17% in November 2016. All items prices doubled during the year ending in 18% in November 2016.
The price of the nations major income earner Crude Oil in the international was a major reason for the current economic realities of Nigeria as oil price plunged to 30USD per barrel against the 2016 budget benchmark of 38USD per barrel.
The unrest in the niger delta also contributed significantly to the economic stagnation currently being experienced in the country as the Nigeria was unable to produce up to 2.2million barrels per day production target throughout the year.