ASSESSING PUBLIC PERCEPTION ON THE INFLUENCE OF HIGH INFLATION RATE ON INDIVIDUAL PURCHASING POWER AND STANDARD OF LIVING UNDER PRESIDENT TINUBU ADMINISTRATION

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Ensuring economic stability is a significant hurdle faced by governments worldwide. Government policy, national consumption rate, deflation, inflation, and other factors significantly influence a country's economy (Stephen, 2022). Inflation is the continuous rise in the overall prices of goods and services (Kunle, 2019). This indicates that the comprehensive price index is steadily increasing. In a dynamic and evolving economy, certain prices will increase while others will decrease as the supply adjusts to changes in consumer preferences, demands, and national requirements (Chuks, 2017). Osas (2020) defines inflation as a widespread and persistent rise in prices and customs. The increase will be divided into distinct categories of economic commodities. Inflation modifies the relationships between prices. According to Okpi (2021), inflation refers to the increase in prices of products and services. This is measured by the consumer price index (CPI), which determines the average price change of commonly bought items including food, clothing, and transportation (Okpi, 2021).

Inflation has far-reaching consequences that affect both societal and economic stability. It exerts influence on multiple economic factors and imposes costs on the broader economy (Agu, 2021). Inflation consistently triggers adverse consequences, impacting not only economic growth and performance, but also the living standards of individuals. It diminishes the real value of money, diminishes the purchasing power of money, generates unemployment in the economy, limits job opportunities, causes scarcity of manufactured goods, and raises the prices of commodities, among other effects. The decrease in the spending and purchasing abilities of the general public has a direct impact on their consumption habits, which in turn affects the business operations of all sectors, including manufacturers, merchants, and service providers.  Significant inflation rates can exert a substantial impact on an economy, affecting the expenses associated with daily life, the accumulation of savings, and the allocation of investments (Akande, 2023). High inflation leads to a fall in the purchasing power of individuals, resulting in a reduced ability for consumers to purchase products and services with the same amount of money. This phenomenon can result in a reduction in the overall quality of life, particularly for individuals on fixed incomes or low earnings (Shedrack et al., 2021).

Nigeria, the nation with the highest population in Africa and one of the major economies on the continent, has seen varying inflation rates throughout the years. The economic well-being is intricately linked to the inflation rate, particularly with regards to the purchasing power of individuals and households. In 2022, Nigeria's inflation rate stood at 18.85%, above both the global average of 8.27% and the Sub-Saharan African average of 14.47% (World Bank, 2022). These variations have been seen in Nigeria during the timeframe of the Structural Adjustment Programme. As an illustration, the percentage was 5.7% in 1986, then rose to 13.0% in 1990, and subsequently spiked to 29.3% in 1996 (Central Bank of Nigeria, 2017). The inflation rate reached 18.17% year-on-year in March 2021, marking the highest level since January 2017, a period when Nigeria experienced a recession (Okpi, 2021). Nigeria experienced a significant increase in its inflation rate in 2022, reaching 21.47%. Additionally, the food inflation rate jumped to 23.75% during the same period (Ighakpe, 2023). Furthermore, there was a notable surge in consumer prices for necessary commodities (Agbon, 2022). Fakoyejo (2024) states that the inflation rate in Nigeria has been consistently increasing, going up from 22.41 percent in May 2023 to 33.69 percent in April 2024. Similarly, food inflation has risen from 24.82 percent to 40.53 percent during this time frame.

Nigeria has seen diverse economic difficulties over the years, including volatile inflation rates. The inflation rate and overall economic well-being of the population are heavily influenced by the economic policies and actions made by each administration (Wale, 2024). President Bola Tinubu's administration has implemented a range of economic reforms and programmes with the goal of achieving economic stability and growth (Fakoyejo, 2024). Nevertheless, the extent to which these policies effectively manage inflation and improve the quality of life is still a matter of public discussion and examination (Jamiu, 2024). The perception of the general public is of utmost importance in shaping the economic environment. It has the potential to impact consumer behaviour, investment choices, and the overall economic stability of a country (Joe, 2019). Gaining a comprehensive understanding of the public's perception of inflation and its effects on their ability to buy goods and services and maintain their quality of life can offer useful insights about the socio-economic conditions of the nation. Additionally, it assists policymakers in assessing the efficacy of their economic initiatives and implementing any required modifications. This study aims to evaluate popular perception regarding the impact of a high inflation rate on individual purchasing power and standard of living during President Tinubu's administration.  

1.2 Statement of the Problem

The Bola Tinubu administration has pursued a range of economic measures with the goal of stabilising Nigeria's economy and fostering growth (Fakoyejo, 2024). Despite the attempts made, the Nigerian population continues to face substantial obstacles to their economic well-being due to the ongoing issue of high inflation rates. Inflation diminishes the ability of citizens to buy necessary goods and services, hence reducing their purchasing power (Adewale, 2017). This problem is most noticeable among households with low and intermediate incomes, as they are more susceptible to price hikes.

An issue of great concern in Nigeria is the government's reluctance to raise the minimum wage for its population, despite the inflationary impact of several policies (Obi, 2024). Significant inflation rates can result in a decrease in the overall quality of life, as individuals face difficulties in sustaining their prior levels of consumption and style of living (Sunny, 2021). Escalating expenses in food, housing, healthcare, and education compel households to make arduous financial choices, frequently resulting in diminished savings and limited investment prospects. In addition, inflation can worsen income inequality, as individuals with less financial resources are disproportionately impacted (Akabueze, 2023). Implementing other policies, such as raising the minimum wage, would have been an effective measure to mitigate the effects of inflation on Nigerians.

Furthermore, the absence of thorough investigations specifically examining the public's perception of inflation during President Tinubu's government results in a deficiency in comprehending the socio-economic challenges experienced by Nigerians. It is crucial to address this gap in order to design policies that are attentive to the demands of the population and to enhance economic stability and quality of life. Although economic statistics offer a quantitative assessment of the influence of inflation (Kosoko, 2023), they fail to completely encompass the real-life experiences and perspectives of the Nigerian population. Comprehending the wider consequences of high inflation requires taking into account the significant role of public perception (Kosoko, 2023). How do individuals assess the influence of inflation on their everyday existence? What are the main issues they are worried about and how do they deal with them? How do people assess the efficacy of President Tinubu's policies in tackling these issues? Hence, the necessity for doing this investigation.

Objectives of the study

The primary objective of this study is to critically assess the public perception on the influence of high inflation rate on individual purchasing power and standard of living under President Tinubu administration. Specific objectives of this study are to:

To assess whether high inflation rate has an effect on individual purchasing power and standard of living under President Tinubu’s administration

To evaluate the public’s opinion on the impact of high inflation on their purchasing power and standard of living

To identify the challenges faced by individuals due to high inflation rates.

To provide solutions based on public perception data to help address inflation-related issues and enhance economic well-being.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

Does high inflation rate have an effect on individual purchasing power and standard of living under President Tinubu’s administration?

What is the public’s opinion on the impact of high inflation on their purchasing power and standard of living?

What are the challenges faced by individuals due to high inflation rates?

What are the solutions based on public perception data to help address inflation-related issues and enhance economic well-being?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: High inflation rate does not have an effect on individual purchasing power and standard of living under President Tinubu’s administration

Ha: High inflation rate has an effect on individual purchasing power and standard of living under President Tinubu’s administration.

1.6 Significance of the study

Evaluating the public's impression of the impact of elevated inflation rates on purchasing power and the quality of life during President Tinubu's tenure is essential for comprehending the socio-economic dynamics in Nigeria. This study offers a thorough examination of the difficulties encountered by individuals and provides significant perspectives for policymakers to strengthen economic stability and improve the quality of life for the Nigerian populace. The study will provide a fundamental reference point for policymakers, the general public, students, and scholars.

The findings will inform policymakers about the public's experiences and perspectives, facilitating the formulation of more efficient economic policies. Gaining insight into the influence of inflation on the ability to buy goods and services and the overall quality of life can assist in devising and executing strategies to maintain economic stability. 

Moreover, future academics will employ it as a comprehensive analysis of the existing literature. As a result, other students who are interested in studying this subject will have the chance to use this work as reliable information that can be thoroughly assessed. 

1.7 Scope of the study

Broadly, this study focus is to critically assess the public perception on the influence of high inflation rate on individual purchasing power and standard of living under President Tinubu administration. Specifically, this study seeks to evaluate the public’s opinion on the impact of high inflation on their purchasing power and standard of living and identify the challenges faced by individuals due to high inflation rates. Further, this study will focus on assessing public opinion on the effectiveness of President Tinubu's economic policies in managing inflation and improving the standard of living and it also seeks to provide solutions based on public perception data to help address inflation-related issues and enhance economic well-being.

1.8 Limitations of the study

As is common in all human endeavours, the researchers faced minor limitations when conducting the study. The main limitation was the lack of extensive literature on the subject, as there is limited data available for assessing public perception on the influence of high inflation rate on individual purchasing power and standard of living under President Tinubu administration. Consequently, a significant amount of time and effort was necessary to locate the appropriate materials, books, or information and to gather data. 

Additionally, this study is constrained by its small sample size and narrow geographical scope, focusing just on Nigeria. Consequently, the results of this study are not applicable for generalization, thereby leaving room for further research. 

Additionally, the researcher's limitations were primarily due to financial constraints, as they are a student and do not have a source of income to sustain themselves. It was challenging to afford transportation expenses to and from the study location due to the high cost of transportation, which is influenced by inflation in Nigeria today.

Furthermore, the researcher faced a time constraint due to the need to do this research while also fulfilling the obligations of attending lectures and other educational activities.

1.9 Definition of terms

Public perception: Public perception is simply the type of information obtained from a public opinion survey. That is, “publicopinion” is merely the aggregate views of a group of people (usually a randomly selected sample) who are asked directly what they think about particular issues or events.

Inflation: Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Standard of living: Standard of living is the quality quantities of goods and services available to the total number of people living in a geographical area at a particular time for some time.