Devastating effects of inflation on Nigerians
In this piece, HENRY FALAIYE examines how Nigeria’s rising inflation is rapidly eroding people’s wealth, making it harder to save or invest
As the cost of living soars, financial stability becomes a mirage, leaving many struggling to maintain economic security.
For millions of Nigerians, saving money has long been seen as a fundamental pillar of financial security. Parents instill in their children the discipline of setting aside earnings, believing that consistent savings will provide a safety net for the future.
However, what many fail to realise is that inflation is silently eroding the value of their hard-earned money. As the cost of goods and services rises, the purchasing power of savings diminishes, making it harder to afford necessities over time.
Even those who diligently set aside money in bank accounts or traditional savings schemes are not spared. While their balances may remain intact, the real worth of their savings is steadily shrinking. The rising cost of food, housing, transportation, and healthcare means that what was once enough to sustain a family for months may now barely last a few weeks.
However, without strategic financial planning or inflation-proof investments, many Nigerians risk watching their savings turn into worthless digits on a bank statement.
Inflation in Nigeria has reached alarming levels, pushing millions into financial distress. According to the National Bureau of Statistics (NBS), as of January 2024, Nigeria’s inflation rate stood at 29.9 per cent, the highest in over two decades.
Even more concerning is food inflation, which soared to 35.4 per cent, making necessities like rice, bread, and cooking oil nearly twice as expensive as they were a year ago.
For many Nigerians, this means their income and savings can no longer keep up with the rising cost of living.
Meanwhile, as prices continue to surge, many Nigerians are unknowingly watching their wealth diminish before their eyes. The money they save today, with the hope of securing their future, is losing value at an alarming rate. Inflation acts like an invisible thief, eroding purchasing power and rendering traditional savings methods ineffective.
A fixed amount set aside in a bank account months ago can no longer buy the same quantity of food, fuel, or essential goods.
For the average citizen, this means that despite working hard and being financially disciplined, their savings are becoming worthless over time.
The dream of financial security is slipping away as inflation outpaces income growth. Many are trapped in a cycle where no matter how much they save; it is never enough to keep up with skyrocketing prices.
Without proper financial strategies, including smart investments and inflation-proof savings plans, their hard-earned money risks becoming nothing more than stagnant numbers on a bank statement.
How inflation is destroying savings
Speaking with The PUNCH, Mr Chinwe Okafor, a 42-year-old schoolteacher in Isolo, Lagos, said saving money has always been a priority.
He said, “I diligently deposited a portion of my salary into a fixed deposit account every month to secure future savings. However, after four years, the purchasing power of my savings had been cut in half.
“I saved N2m, but when I wanted to use it to buy land in 2024, the price had tripled. The same amount of money that could buy two plots in 2021 could barely afford one.”
Like Okafor, millions of other Nigerians are adversely affected by inflation even without realising it. A savings account with an interest rate of four per cent per annum does little when inflation is surging at almost 30 per cent. This means that while money remains in the bank, it is effectively devalued daily.
According to a financial analyst, Dr Bamidele Fashina, the root problem is that many Nigerians do not understand how inflation erodes wealth.
He said, “The naira loses value over time, and if your savings are not earning returns higher than inflation, you are losing money.
“Keeping money in traditional savings accounts without a growth plan is like storing ice under the sun; it melts away,” Fashina said.
Are banks offering inflation-protected savings options?
One would expect financial institutions to provide Nigerians with savings products that safeguard their money from inflation. However, research suggests that most banks continue to offer low-interest savings accounts and fixed deposit options that fail to outpace the country’s surging inflation. Instead of shielding depositors from financial losses, these accounts are effectively eroding their wealth over time.
According to a recent survey of major Nigerian banks, including GTBank, Zenith Bank, Access Bank, and UBA, the average interest rate for a fixed deposit account ranges between three per cent and seven per cent annually.
This is shockingly inadequate when compared to the country’s inflation rate, which soared past 24.48 per cent as of January 2025. This figure is based on a rebased Consumer Price Index, which reflects updated price and weight reference periods.
At these rates, depositors are experiencing a net loss in real value, as their money devalues faster than it grows.
For millions of Nigerians relying on traditional banking to secure their financial future, this reality is deeply concerning. Instead of growing wealth, they are unknowingly losing purchasing power each year.
Without inflation-protected savings options, such as investment-linked savings plans, high-yield bonds, or dollar-denominated accounts, bank customers remain vulnerable to economic instability. The failure of financial institutions to provide meaningful solutions has left many searching for alternative ways to preserve their wealth in an increasingly difficult economic environment.
An investment banker and wealth advisor, Olumide Adeyemi noted that banks prioritise their profits over protecting customers from inflation.
“The reality is that banks make more money lending than offering high-interest savings accounts. They prefer to give loans at 24 per cent to 30 per cent interest rates while paying savers just four per cent to six per cent. It’s an unfair system that leaves the average Nigerian at a disadvantage,” Adeyemi stated.
Besides, some banks have introduced mutual funds, treasury bills, and fixed-income securities, which offer slightly better returns. However, these options require financial literacy and are not widely adopted by low- and middle-income earners.
Real-life impact: Struggles of everyday Nigerians
For Mr Tosin, a Lagos-based retired civil servant, inflation has turned his pension savings into a nightmare.
“I saved over N9m, thinking it would last me through retirement. But now, my medical bills alone cost me over N200,000 per month. Things are getting worse, and my savings are vanishing fast,” Tosin decried.
Similarly, Grace Adediran, a 29-year-old entrepreneur, explained how she had saved N500,000 in early 2024 to buy equipment for her small bakery. By the time she was ready to purchase in 2025, prices had doubled, making her savings insufficient.
“I had to take a loan at 27 per cent interest just to afford the equipment. Saving money didn’t help me; it set me back,” Adediran stated.
These cases highlight a harsh reality: Nigerians who rely solely on savings without investment strategies are finding themselves financially stranded.
How to beat inflation: Experts weigh In
While inflation is a formidable challenge, financial experts suggest alternative strategies to safeguard wealth as follows;
Invest in high-yield assets
According to Fashina, investing in stocks, real estate, and government bonds offers better long-term value than traditional savings.
“Treasury bills and FGN bonds provide yields of up to 15 per cent, which, while not fully matching inflation, is better than earning four per cent in a savings account,” he explained.
Consider dollar investments
Given the naira’s depreciation, many Nigerians are moving their savings into dollar-denominated assets such as Eurobonds, U.S. stocks, and cryptocurrency.
Adeyemi advised, “Keeping part of your savings in stable foreign assets protects against currency devaluation.”
Adopt inflation-protected savings plans
Some fintech platforms, such as Cowrywise, Risevest, PiggyVest, and Carbon, offer investment plans tailored to beat inflation.
These digital platforms allow Nigerians to invest in high-yield funds with better returns than traditional banks.
Diversify income streams
Experts recommend that individuals should not rely solely on salaries but build alternative income sources through freelancing, small businesses, or digital investments.
“A single income source is risky in today’s economic climate. Diversifying income helps cushion against financial shocks,” Fashina advised.
A call for financial awareness
The harsh reality is that simply saving money is no longer enough to build or preserve wealth in Nigeria. With inflation relentlessly eroding the value of the naira, Nigerians who rely solely on traditional savings methods are unknowingly losing money over time.
What once seemed like a prudent financial habit, setting aside funds in a bank account, is now a slow financial drain.
Without proactive financial strategies, many risk watching their hard-earned savings turn into mere figures with diminishing purchasing power.
Also speaking, a banker, Mr Tuyor Otubanjo, said, “To stay ahead, Nigerians must shift towards investment-driven financial strategies.
Investing in assets that outpace inflation, such as real estate, stocks, mutual funds, or dollar-denominated accounts, is now a necessity, not a luxury.”
Meanwhile, Otubanjo noted that the burden should not fall entirely on individuals. Banks and financial institutions must take responsibility by offering inflation-protected savings products, such as high-yield fixed deposits, treasury bills, or inflation-indexed bonds, that safeguard depositors’ money.
He noted that the government must implement sound economic policies to stabilise inflation, strengthen the currency, and foster a more secure financial environment. Without such interventions, wealth erosion will persist, deepening economic hardship.
Adeyemi said, “It is time for Nigerians to think beyond saving—they must learn to invest wisely. Because in this economy, money kept idle is money lost.
“Only through financial literacy, strategic investments, and proactive economic policies can Nigerians truly protect and grow their wealth in the face of inflation.”
