Inflation means prices of everyday things keep going up over time. When inflation rises, the same amount of money buys fewer goods and services than before.
It happens when demand for goods is higher than supply, when production costs increase, or when too much money is circulating in the economy. Businesses then raise prices, and the overall cost of living rises.
In Nigeria, inflation is tracked and reported by the National Bureau of Statistics. Monetary policy decisions aimed at controlling inflation are handled by the Central Bank of Nigeria. High inflation affects food prices, transport, rent, and many daily expenses.
Globally, countries also monitor inflation closely because it affects economic growth, wages, and interest rates. Central banks around the world adjust interest rates to try to control rising prices.
Example: a loaf of bread costs ₦500 today. A year later it costs ₦650. The price increase is inflation. Your money now buys less bread than before.
Global example: if fuel prices rise sharply around the world, transportation costs increase and many products become more expensive.
Inflation reduces the purchasing power of money and is one of the most important indicators in any economy.
