What is inflation? What efforts have been made by the government to combat inflation in Nigeria?

Meaning of inflation. Inflation is a persistent and general rise in the level of prices of goods and services in an economy over a period of time, accompanied by a fall in the purchasing power (value) of money.

Government efforts to combat inflation in Nigeria

• Contractionary monetary policy: the Central Bank of Nigeria raises interest rates, sells securities through open market operations and raises the cash reserve ratio to reduce the money supply and check demand.
• Contractionary fiscal policy: the government reduces its own spending and increases taxes to withdraw excess purchasing power from the public.
• Increased production of goods: agricultural and industrial programmes (for example food-production schemes) raise the supply of goods to match demand.
• Importation of essential commodities: importing scarce goods increases supply and eases pressure on prices.
• Price control: setting maximum (ceiling) prices for essential goods to restrain runaway prices.
• Wage and income control: restraining sharp wage increases that would push up costs and demand.