Why Your Money Buys Less Every Year And How to Protect Yourself

Inflation is an increase in the average price of goods and services over time, which reduces the purchasing power of money. It is a monster that steals workers’ money, impoverishes the people, and disrupts asset prices.

Things are becoming more expensive as inflation rises in Nigeria, a country that is reeling from a cost of living crisis as the World Bank says 139 million people are living under the poverty lin.

It is so bad that the price of a Peugeot 505 that was around N6,000 in 1980 is not enough to buy a bag of rice today.

A bag of rice that costs between N8,500 and N10,000 in 2009 now goes for between N50,000 and N80,000.

In September 2025, the Headline inflation rate eased to 18.02 percent relative to the August 2025 inflation rate of 20.12 percent.

Inflation skyrocketed to an all-time high of 34.80 percent as at December 2024 due to the impact of the removal of subsidy on fuel and the liberalisation of the foreign exchange market.

Because the oil sector provides for 95 percent of Nigeria’s foreign exchange earnings and 80% of its budgetary revenues, a precipitous fall in the price of the commodity usually depletes the country’s external reserve.

Whenever oil prices fall and the external reserve is under severe pressure, the country is forced to devalue its currency.  And because Nigeria imports most of its raw materials and some basic food items, it is susceptible to imported inflation.

How do we protect ourselves from currency debasement?

The most effective way of combating inflation is to buy things (assets) that are going up in value.

You can hedge against inflation by investing in stocks that do better during inflationary periods because companies raise prices to compensate for rising input costs.

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