The naira is progressively rebounding against the dollar and petrol prices have remained largely stable, but inflation keeps rising almost unstoppably. Something isn’t adding up. If the initial drivers of inflation have been relatively tamed, why isn’t this reflected in the prices of consumer goods?
The answer appears to be embedded in a new term I’ve learned: "greedflation." It’s a neologism made by combining "greed" and "inflation" to describe a situation where inflation is driven not just by the usual economic factors like supply and demand imbalances, cost-push factors, or monetary policy, but by corporate greed and the naked exploitation of consumers by conscienceless marketers.
Of course, it needs to be acknowledged from the outset that the ongoing, totally avoidable, unprecedented inflationary pressures on the Nigerian economy were activated by the thoughtless, insensitive, neoliberal, IMF-inspired economic policies of President Bola Ahmed Tinubu. There’s no way to sugarcoat it.
When you unleash a double whammy of petrol subsidy removal and a boneheaded depreciation of the naira (deceptively called “floating,” which is actually “sinking”) in a rudimentary, import-dependent economy like Nigeria’s, you inevitably open the floodgates to soul-crushing hyperinflation—such as Nigeria is going through now.
Fortunately, Tinubu seems to be seeing the light now. He has so far bucked pressures from the IMF to allow petrol prices to climb to over 1,000 naira per liter.
The government had denied Daily Trust’s September 2023 report that it had resumed paying subsidies through the backdoor to keep the current pump price of petrol. Five months later, the IMF confirmed the report.
The IMF regretted that Tinubu had “capped retail fuel and electricity prices” in order to “ease the impact of rapidly rising inflation on living conditions, thus partially reversing the fuel subsidy removal.” The IMF doesn’t want the government to “ease the impact of rapidly rising inflation,” so it “advised the administration of President Tinubu to completely stop the payment of subsidies on petrol to free funds to run the government,” according to Daily Trust of February 14.
“Running the government” is more important to the IMF than the wellbeing of the people. People can drop dead on the streets as a consequence of starvation that subsidy removal instigates. The IMF doesn’t care. In fact, that is what it wants.
Well, Tinubu’s Special Adviser on Energy, Mrs. Olu Veŕheijen, has called the bluff of the IMF— at least for now. On March 8, in defense of partial subsidies to stop petrol prices from increasing further, she said “the government has the prerogative to maintain price stability to address social unrest. They reserve the right to intervene.
“If the government feels that it cannot continue to allow prices to fluctuate due to high inflation and exchange rates, the government reserves the right to intervene intermittently…”
The naira is also being rescued with subsidies after it drowned in the shark-infested waters of the global currency market in the aftermath of its “floating”— at the prompting of the IMF, of course. Is Tinubu finally growing some testicular fortitude against the racist, callous, anti-people bullies at the IMF? It’s too early to tell.
Well, why are the effects of the thawing of the neoliberal nonsense that Tinubu started with not showing in the prices of goods? It’s partly down to the unrestrained avarice of sellers. This phenomenon is happening even here in the United States, although it seems to be less vicious than what I am sensing in Nigeria.
The traditional term to describe the act of taking advantage of consumers by arbitrarily jacking up prices is “price gouging.”
The idea behind this concept is that companies, retailers, and street sellers (in the case of developing economies like Nigeria) take advantage of certain conditions (such as supply chain disruptions, increased demand, economic recovery phases, natural disasters, etc.) to raise prices beyond what would be justified by cost increases alone, thereby increasing their profit margins at the expense of consumers.
Nigerians experienced this phenomenon in its rawest, crudest, most rapacious form in May 2023 when petrol marketers jacked up the pump price of petrol from less than 200 naira per liter to more than 500 naira per liter—on old stock that was subsidized by taxpayers’ money—shortly after President Tinubu announced that petrol subsidies were gone for good.
Greedflation is most observable, according to experts, in industries with a few dominant players or where there is a lack of competition, such as in the building sector in Nigeria. Interestingly, the government has been able to successfully persuade cement manufacturers to bring down the prices of cement, so this fact isn’t applicable across the board.
In the informal economy, prices of goods and services remain unusually high even when the factors that propelled them in the first place are easing. So, while the government is still to blame for the current inflation, the primitive acquisitive impulses of marketeers and profiteers help to make this worse.
As I pointed out before, this isn’t exclusive to Nigeria. Here in the United States, we’re also contending with greedflation and even what has been called “shrinkflation.” Shrinkflation occurs when companies, instead of increasing the prices of goods, shrink the quantities they put in the packages of the goods, which forces consumers to buy more.
So, there is a shrinkage in quantity, but not in price, and companies that do this hope you won’t notice. In a February 11 video, President Joe Biden called shrinkflation a “rip-off” and urged companies to put a stop to it.
For example, the price of a bag of okra (as Oyinbo people call okro) at Walmart, which I regularly buy for my “swallow,” hasn’t changed, but the quantity has. Two bags used to be enough for a week’s worth of soup. Now I need four.
American consumers are fighting greedflation and shrinkflation by cutting back on spending, finding cheaper alternatives to products they habitually used, and ditching name brands for generic and cheaper brands.
This has translated to drastic declines in sales for many companies, which is forcing them to reduce the prices of their products to attract more sales.
I don’t know if Nigerian consumers have the alternatives that Americans have to cause sales declines in the products of greedy marketers, which might then force them to bring down their prices. Maybe not.
And that’s why governments in Nigeria have to be extra careful to not implement policies that can trigger inflation because prices of goods in Nigeria are like our ages: when they go up, they never come down.
Of course, there are exceptions. But, for the most part, petrol and commodity price hikes in Nigeria are often permanent. That's how you know that "deregulation," "liberalization," "market forces," etc. that Nigerian political elites influenced by right-wing economics like to spout are all scams. Any economy where prices go up and never come down for any reason is a giant swindle.
The Tinubu government that instigated this preventable downturn in the economy by playing the IMF playbook has a responsibility to help tame the monster of greedflation that’s devouring our people.
Strengthening the capacity of regulatory bodies to monitor and penalize price manipulation and collusion among businesses can help control unjustified price increases. Educating consumers about their rights and how to report unfair pricing practices can empower them to fight against greedflation—in addition to ditching exploitative marketers where they can.
The government can also borrow a leaf from governments in the West, which use tax policies to incentivize businesses to maintain reasonable price levels, especially for essential goods and services.
Fighting greedflation requires the commitment of both the government and conscientious elements in the private sector, along with the active participation of civil society, to create a more stable, fair, and competitive economic environment.