Nigerians brace for economic strain as petrol price soars

Iben Ejikeme Business 20/06/2024

Estimated reading time: 3 minutes

Nigerians are facing a significant financial burden as the price of petrol, also known as Premium Motor Spirit (PMS), skyrocketed by a staggering 223.21% to an average of ₦770 per litre in May 2024. This data, released by the National Bureau of Statistics (NBS) in its Premium Motor Spirit (Petrol) Price Watch report for May 2024, paints a grim picture for the nation’s economy.

The report highlights a sharp increase not only year-on-year but also month-on-month. Compared to ₦238.11 per litre in May 2023, the price has more than tripled. This dramatic rise is further compounded by a 9.75% increase from ₦701.24 per litre recorded in April 2024.

The report stated “Looking at the variations in the state prices, the top three states with the highest average price of the product in May 2024 include Adamawa State (₦1709.00), Sokoto State (₦1675.00) and Bauchi (₦1657.92). Furthermore, the top three lowest prices were recorded in the following State namely, Niger State (₦1140.20), Kano State (₦1153.33), and Oyo State (₦1236.92).

“The zonal representation of average price of diesel showed that North-East Zone has the highest price of ₦1605.91 while South West Zone has the lowest price ₦1303.60 when compared with other zones.”

The high cost of petrol has a ripple effect throughout the economy. Transportation costs for goods and services are expected to surge, leading to potential price hikes for consumers across the board. This could have a significant impact on the cost of living, particularly for essential items.

The NBS report also reveals a disparity in petrol prices across different states. Jigawa state has the highest average price at a staggering ₦937.50 per litre, followed by Ondo and Benue states at ₦882.67 and ₦882.22 respectively. Lagos state, on the other hand, has the lowest average price at ₦636.80 per litre.

The reasons behind this surge in petrol prices are yet to be definitively explained by the authorities. However, it is likely due to a combination of factors, including global oil price fluctuations and potential disruptions in the domestic supply chain.

The economic impact of this petrol price hike is likely to be severe. Businesses may struggle to cope with increased operational costs, potentially leading to job cuts and a slowdown in economic activity. Consumers, facing a squeeze on their disposable income due to rising prices, may be forced to cut back on discretionary spending.

The Nigerian government is under pressure to address this issue and mitigate the negative consequences for the economy and its citizens. Potential measures could include exploring fuel subsidies, increasing refinery capacity to reduce reliance on imported fuel, or investigating the factors contributing to the price disparity across states.