Inflation – Effect On Income & Wealth Distribution Of The Nation

Inflation – Effect On Income & Wealth Distribution Of The Nation: [A Case Study Of The Petroleum Training Institution (PTI) Efuru Warri]

Inflation – Effect On Income & Wealth Distribution Of The Nation: [A Case Study Of The Petroleum Training Institution (PTI) Efuru Warri]

Inflation is neither new in the economic system of Nigeria nor the world at large. Variations in magnitude or rates have been noticed to be in existence.

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In Nigeria the rate of inflation was about 10 percent between 1969 and 1970. Prices rose by about 14 percent in 1970 (immediately after the civil war of 1970). Then fell to 3 percent in 1972. Rose by about 16.1 percent in 1974 and reached a rate of about 34 percent increase in 1975.

In the 80’s, the rate of inflation between 1908 and1982 was around 30 percent with the rest of the 80’s at the rate of 40% averagely.

The 90’s were at the rate of 40 to 50% between 1990 to 1992 and then 1994 rate was officially put at above 60 percent. Inflation was and is still the greatest task to government’s policymakers in the 1990’s.

In the world, between 1979-1801, prices rose by more then 50 percent. Also between 1939-1941, the prices level was record to be almost what it was before.

The height of Henry V111’s debasement in England (through the mint reducing the weight of remitted coins, lowering their gold and silver content, and increasing the normal value of existing coins by assigning them higher values as well as melting down plate and ornament taken from the ransacked monasteries), and prices between many 1542 and mid 1551, had an inflationary rate of 16 percent per annum 23 percent during war with France and almost 30 percent during the first world war. This is about the highest rate attained in the world history.

It is now evident that inflation persists both in the developed and developing countries, with difference in magnitude or rates. The rate is developed countries making comparison with present situations, as the above noted rates were attained during the seventeenth century and the early part of the eighteenth century (1799-1801), and the early to mid parts of the nineteenth century (1939-1951).

In the case of Nigeria, the rates were attained in the rate nineteenth century (1969-1975).

Inflation simply refer to a continuous or in —- rise in prices.

According to Webster’s seventh new collegiate dictionary, inflation is defined as an increase in the volume of money and credit relative to available good resulting in a substantial and continuous rise in the general price level. This definition points out the fact that inflation cannot occur unless there is undue increase in the volume of money and credit. This brings about continued rise in general price level of goods, which in not being matched by the proportionate quality of goods and service in the economy.

Inflation become significant in Nigeria after the Nigeria civil war thought it might have been in existence long before then.

Immediately after the Nigeria civil war, prices took an upward turn from their previous level due to the shortage of goods and services, caused by the disruption of productive factors by the civil war.

Furthermore, the caused factor of salaries and wages review should not be left unmentioned. The review started with the Adhoc Award of 1970 which was followed by the Udoji and William Awards of 1974. all these awards intensified the inflationary pressure.

Also, the high prices if imported goods arising from increases in foreign prices and instability of international exchange rates. Surcharge from post congestion, storage facilities, marketing arrangements plus the distribution new work.

The issue of gradual remove of the remaining 20 percent on oil subsidy is the most current inflationary element in the Nigeria economic system.

If inflation were to every one in exactly the same way and degree, it would have no importance what so ever. It’s social significance arises from the fact that it always does affect people differently. It’s effect on have wife (A) would differ from it’s effect on house wife B depending on personality income and family. Whether in village or town are of relevance to the study.


The inflationary period is a time of high prices of goods and services this lowers the quantity and type of products (goods and services) purchasable by the messes in Enugu state at any point in time. The problem posed is that Enugu dwellers others in the society are unable to purchase types (quality) and quantities of desired products during inflation.

During inflation, income (especially of those fixed income earners and the very poor ones in the society) are unable to match the increasing prices of goods and service. This continues as long as rising prices and falling purchasing power persists. The problem as the ability of masses to purchase products” in the light of continued rising prices become reduced.

Equally of importance is the issue of inflation giving rise to the different societal classes, thereby creating gaps in the society with income as the distinctive factor. There is a high gap between incomes of fixed incomes earners and the profit earners. This is because the profit earners incomes tend to rise with the rising price of products as opposed to those of the fixed income earners.

It is also worth while to note that during an inflationary period, saving decline. This is because a decline in savings results in low investment, whereas low investment retards economic growth.

The pertinent questions to ask here is how will the masses be able to purchase the desire mix of products. How will the fixed income earners be able to maintain their standard of living at periods pf continued rising prices? How do poor masses make both ends meet under a situation of declining purchasing power?

How will the government bridge the gap between the fixed income earners and profit earners?


The objective of the researcher is

1. To how inflation affect the income of average individual living in Enugu metro list

2. To find out low the negative effect of inflation on income can be corrected or averted.

3. To identify the class of workers that inflation affect most


The importance of this study lies in the fact that an analysis of the meaning, cause/ types and effect of inflation on the masses (a market segment of the heterogeneous population) etc, will give a more realistic out look of how the total market segments (the population as whole) are being affected.

It is hoped that a stud of this nature will.

1. Expose the sufferings of the masses through its finding to policy makers for formulation and belting pf life for every citizen.

2. Help marketer in the planning of the marketing mix for their products

4. Assist the planning units of the government through the provision of more efficient feedback information on the effectiveness of their anti inflation policies


H0- inflation affects the income of average individual living in Enugu


H1- Inflation does not affect income of average individual living in Enugu



Enugu, Onitsha and Awuzu localities were defined by the research to cover the occupational sectors of individuals within these localities this was grouped into five,

1. Group A. masses in the parastatals of the public sector

2. Group B. masses that are self employed

3. Group C. masses that are civil service

4. Group D. masses in the private sector

5. Group E. other masses and student house wives

The grouping was on the basis of relative uniform income among the masses in the same sector and also for case of questionnaire administration and control. Also, the use of occupational basis will aid in the easy determination of which classes individuals suffer most under an inflationary situation.

Furthermore, the locality that has its masses mostly affected will be easily detected, using the same occupational variable as basses for comparison.

The sample space comprised those in the public and private corporations, self- employed, retire (pensioners) ordinary masses (non income earners) and student that are married, with or without children.


Research works are subject to one form of limitation or other. Mine is not an exception it was the initial though of the researcher that the exercise was going to be easy and smooth, but the contrary was the case

As a student, several academic demand compete for the limited but precious time available. This implies that non of these competing exercise could be effectively handled without the other being worse off. That was my situation. Although the time expended was too small to do Justice to the study, the opportunity cost in terms of other equally important activities forgone or cursorily attended to was much.

At this period or general economic crunch where the cost of every thing is high carrying out a study and all that it involves in the three localities (Enugu, Onitsha, and Awuzu) is much more that a student could bear with his meager purse.

The researcher faced some embarrassments arising from the impatience, too much busy and uncompromising attitude of respondents, even when the study is supposed to encourage ready co-operation from the house wives. It was however, with convincing tact that I manage to make through this obstacle after many journeys to Onitsha and Awuzu localities.

Inclusively, was the problem of inadequate data and previous works of relevance to the study secondary data were manly peripheral while previous works were completely unrelated to the issue at State?



According to water B. Meigs & Robert F. Mergs defined price level or decrease in the purchasing power of the dollar. The general price level is the weighted average of the price of goods and service in the economic. It is also I which there is a persistent upward movement in general price level or in which there would be such a persistent up ward movement but for the presence of direct control over price.

Also according to Martin. Warren (1982). The term inflation refers to a rise in the level of price in general. It may alternatively be considered as a fall in the purchasing power of the currency of an economy.

Ideally, this general rise in price school is distinguished from specific price movements, changes in relative prices of individual types of goods and service in respond to change in supply and demand, government policy and so on.

Diernberg etal (1984) also define inflation as a casual swelling of the stream of money at a rate of faster than that of the stream of things i.e. goods and service on which this stream of money is spent, and that money creation is inflationary when the additional purchasing power has no counter part in goods and service people want to buy.

Furthermore Allan R Drebin (1972) says that inflation is a counting rise in prices as measured by an index such as the consumer price index (cpi) or buy the implicit price defecation for gross national product.

The four definitions stress the point of general rise in the price level being unaccompanied by a corresponding rise in the price level being unaccompanied by a corresponding rise in the volume of goods and services. Implied from the definition is the reasoning that just an increase in the price of a commodity or handful of commodities is not symptomatic of an inflationary situation for inflation of exist the rise in price should be macro and persistent as well.


Previous discussants on the topic attributes the causes of the phenomenon in Nigeria to three main fundamental variables, cost- push factors excess demand and increase in aggregate money supply. The other causal factors are derivatives from the thee major mentioned above. These three variables gave birth to the three major types of inflation in Nigeria they are the cost-push wage. Price spiral inflation the demand pull inflation and the open inflation.

The cost push wage- price spiral inflation has not been a new phenomenon in the Nigeria economic system. It was founded during the medieval period, but revived in the 1950’s and again in the 1970’s as the principle type of inflation.

The emphasis here is on the rise in the cost of production might come about either through a wage- push or a profit-push of living of workers, definitely, they will demand for more wages and hence a rise in the cost production follows. If this is not followed by increase in the production of goods and service (which does not usually happen), producers may be force into the act of rousing the prices of their goods and service in other to maintain their profit margins. With these conditions, worker again may call for a rise in wage because the former increase was not enough to offset the subsequent rise in price. This is wage price spiral inflation.

Supporting the above discussion, (Akim, Fesi said that “ it occurs when price increase originate from the supply side of the economy either through profit-push or a wage-push resulting from trade union action”

Also Hingan shares the same view by saying that an increase in the prices of domestically produced or imported raw materials are used as inputs they enter into the cost of product of the letter. This s continuous rise in the prices of raw materials tends to set off a cost- price wage spiral.

It was this wage- price spiral inflation that led the Nigeria government to decree against industrial strikes while Adebo commission on wages and salaries and conduction of workers was set up after the civil war in Nigeria.

Demand- pull inflation is a type of inflation caused by rising prices and wages associated with response to the pressure of excessive demand- pull inflation “as too much money chasing too few goods and that it is the tendency for price to rise in the face of his excess demand created by an autonomous shift in aggregate demand schedule”

This kind of situation occurs where the public have too much money but unlimited goods to purchase. A good example was during the Nigeria civil war, when stringent restrictions were placed on imports knowing fully well that most productive sectors were not in production. This then made goods scare and excessive demand existed for those limited quantity of home produce goods.

Another author said that demand-pull inflation occurs when aggregate demand rises faster than aggregate supply and therefore pulls up prices and wages.

Normally when prices tend to respond to the situation of faster rising aggregate demand over supply producer. Usually use it as an opportunity to raise the prices of goods and service. this then leads to an increase in the demand for factors of production wages quickly follow because trade unions are able to exert strong bargaining power because producers are encouraged by there excessive profit to offer higher wages in order to attract or radium labour. Marginal cost therefore rise and this from or higher prices.

Open inflation is where an increase in the quantity of money is not followed by a proportional increase of goods and services produced. Also an over expansion of the currency can be a factor for type of inflation. The over expansion may either be due to the over issue of notes by the monetary authority or the over granting of credit by the commercial banks or both.

One known writer made it clear that “when the money supply increases, it creates more demand for goods but the supply of goods cannot be increased due to full employment of resources. This leads to rise in price. It is a continuous and prolonged rise in the money supply that will lead to true inflation”


Inflation is a universal economic concept regardless of the type economic system and level of economic development attained. However as pointed out before in the introduction it is only difference is magnitude that exist.

AJAGI AND OJO described the Omi present nature of inflation in the following way. Inflation is world wide and it is one of the greatest challenges facing most nations in the 1930s and the significant feature is it’s ability to defy solution in most countries”. 9

It is widely believed that inflation has its roots in the nature of both man and money and therefore originated from the period man began to use money as a medium of exchange. Additionally, it is believed that inflation had occurred in many countries in history including Ancient Greece, Roman, Empire Britain, Span and Renaissance Europe etc

Furthermore, all countries, whether developed, less developed, capitalist, socialist and mixed, suffer from inflation. It has been noticed from events of the day that the less industrial lends (e.g. the countries of Africa and some other developing nations of the Latin America, the far East, and the Caribbean Island) are all examples of places where classic inflationary situation obtain. The currencies of these countries have lost and still lose their purchasing power more swiftly, due inflation.


History recorded that the first placed a persistent rapid rise in the price level featured was in ancient Greece around 332 BC, following Alexander the grate’s conquest at perbia and his transference of the newly acquired gold to Greece. On gold replacing silver as money, prices and wages rose throughout the whole of the Hellenic Empire. Also, the Greek city when close to bankruptcy did not even have a history of coinage debasement.

The Roman Empire debased the copper coinage two hundred year before the Punic war. After the next hundred years when silver was introduced, both copper and silver were debased by minting coins with as increasing proportion of alloys. Augustus in about 30BC introduced for the first time, the usage of gold as a part of the coinage and from then on until the decline of the empire, there was a succession of debasement and inflation. For example, in AD 214 the denanes had approximately forty percent silver content. With the same year too Emperor caracella replaced it as the standard means of payment by a double denries which was only one and half times the vaule of single denaries generated into a copper coin with just a wash of silver. The most serious debasement of all was in gallienus’s reign of between AD 253-68 inflation raged from this period on wards and become one of the main factors that led to Diocletian’s reform of the currency

Furthermore, the different levels of interest on normal loans is an indicator for the different rates of inflation in Greece and Rome. In Greece, the interest rate fell from about it percent in 550BC to 6 percent in 250B and then remand virtually constant until 50BC, while in the Roman Empire, it rose from a level of 4 percent in Ad 250. even through interest rates are affected by many factors other than inflation, nevertheless one cannot help seeking that the fact that rate were falling in Greece but rising in Rome was not unconnected with the quite different underlying trends in the rate of inflation.

Following the decline of come, Europe bank in to the Dark ages. The empire disintegrated into a set of barbarian kingdoms which invaded and plundered each other. International trade decline and from ire fifth to the thirteenth century. We know very little of the behaviour of wage, price or interest rates for the medieval and subsequent periods; however, we have much better information. The behavior of prices in Britain from the mid- thirteenth century to the present is being analyzed.

For two periods (1380- 1510 and 1630-1760) there was remarkable stability of the prices level. It should be pointed out however, that the prices did not remain the same from year to year.

The two period of (1370-1380) and 1815-1914) showed the price level prevailing at the end of the period to be the some with that at the beginning though the interviewing years show far greater fluctuations. The first of these period witnessed rapid inflations associated with the misgovernment of Edward 11, the out break of the hundred years war the black death of 1348-49, which reduced the English population by between a third or a quarter and the period immediately reseeding the pea banks Revelt of 1381)

Each of these was followed by period of deflation and 1289 sometimes severe for example, between 1284 and 1289, the price level fell by nearly one- half.

In the second of these periods, which covers most of the nineteenth century, there were long periods of falling prices following by short periods of fairly sharp rises. Most of the period (1815-50) was one of falling prices. At the end of the Napoleonic wars prices fall very sharply- by over 70% in ten years, while for the remainder of the period, the fall was much more gentle. The period 1875-1900 was also one of gently falling prices.

Another inflation element in England then was the prices revolution of the Tudor and early start point of (1500-1650) the inflation of this period was early small, averaging not more than two percent per annum.

But against he background of the prices stability of the fourteenth and fifteenth contraries, it was substantial and it included periods of fairly rapid inflation.

By the 1550s, the average level of agricultural price was about two and half time the level of forty years previously. Even industrial prices which rose less rapidly than agricultural prices were in the 1550s ninety five percent above there level of twenty year earlier. The most rapid and notorious inflation of this period was Great debasement of 1542-51 during which prices rose by sixty- five percent.

Between may 1542 and mid –1551, Henry Vill and his son Jane remover Edward vi carried out a substantial debasement of the gold and silver coinage largely because of the fiscal pressures to which they were subject the money was achieved by the mint reducing the weight of remented coin, lowering their gold and silver content and increasing the normal value of existing coins by assigning them higher value as well as melting down plate and ornament taken from the ran salted Nona berries and priories.

The price revolution in the six century made price interns of silver (which tend to slightly undestimate prices interns of the money of account) to rise by about 10 percent per annum.

The prices revolution of the sixteenth century with it’s effect was not confined to England alone but to other. European countries like France where price in terms of silver rose by about 1.0 percent per annum, 0.8 percent in Saxony and 1.2 percent in span.

One theory hold that the origin the price revolution and it’s effects on Spain. It points out to the increase in the supply of gold and silver from the Spanish colonies of he new world. Which led by 1660 to a doubling of the European stock of gold and a tripling of the stock of silver as the basis cause of the price revolution. This then led to a rise in Spanish imports and an outflow of specie to other trading nation.

Additionally, increased demand for Spanish exports then especially wool, as a result of increase in population growth, helped a strengthening the inflation trend in span during the period under review.

It is important to note that many of the periods of sharply rising prices have been connected with the increased demand for resource resulting from wars. The beginning of the hundred year war (1327), the English civil war (1642-8), the war with France (1689-97) the war of Spanish succession (1701-13), the seven year was 1756-1815) the crionean war (1854-6) the Boer war (1899-1902), the first world Korean war (1950-53) and the Vietnam war.

The world had been recorded to never have experienced rapid and sustained rise in the price levels the three centuries before the second war as she has been experiencing from then to the present.

The three most severe inflations before the Second World War were the create debasement (1548-51), the period of war with France (1798-1801) and the First World War (1939-45).

Between 1799-1801 price rose by more than 50% also between 1939-1941, the price level was recorded to be almost double what it was before. The high of Henry Vili’s debasement had an inflationary rate of 16percent per annum, 23 percent during war with/ France and almost 30percent during the First World War.

The present inflation is the greatest peace-time inflation is the greatest place- time inflation on the world’s history.

The major period of rising prices in the European countries up to the nineteenth century and of Europe and America since then took place of approximately the same time the world inflation of the late 1960s and 19705 has been associated with financing of he Vietnam war by united state.

Summering, inflation in the world as a whole is explained on the basis of the discovery of new gold for example as in the new world in the sixteenth century and in the united state and south America in the mid- nineteenth century. Period of more rapid inflation tend to occur when the gold standard has war as has suspended especially during the major international war as has been noted. Also bad harvests technological improvement and more rapid rates of economic wide. A map is helped on causing inflation world wide. A map is attached at the appendix further illustration.


Inflation has the most serious economic problem confronting the nation. Although the problem has been evident in the Nigeria economy since 1960, the situation since 1973, and most especially since December 1974 has been particularly serious.

During the civil war (1967-1970), domestic production was disrupted imports were scare because foreign exchange was in short supply, and military expenditure which has not increase much since 1964 increase enormously, however, wages and salaries were frozen.

This coupled with other fiscal measures and the high degree of uncertainty in the economy during the civil degree of uncertainty in the economy during the civil war period, kept down the volume of demand for consumer goods ands service. In areas not effected by the war the price of some demes tic crop actually fell because marketing charnel were disrupted rents also fell in some area because of large scale movement of people away from these areas. The end of the war and the speed with which the tasks of rehabilitation and reconstruction were pursued generated a substantial increase in the amount of money in circulation while domestic supply was show to increase and imports were scarce because of severe restrictions imposed upon them for balance of payment reasons.

In the first half of 1970, the cost of living rose by 14.0 percent and the pressure for wage and salary increases led to the appointment of a wages and salaries review commission under the chairmanship of chief Adebo. Among other thing the commission was to review the existing wages and salaries at all levels in the public service. in December 1970, the commission recommended in interim award of 8.4 percent of salary to public service employees earning N1,000 a years or les and this was followed in August, 1971, by a final award ranging from 12 to 30 percent of salary to all categories of public service employees. This award is known as the adebo award.

Adjustment were to be made to wages and salaries in a the private sector in the light of the recommendation of the review commission headed by chief S.O Adebo.

This interim award of Adebo commission was examined in a special price survey undertaken by the central Bank of Nigeria the period of December, 1970 to March, 1971 the survey showed that the impact of the award (in particular the arrears) coming at a time that dislocation of domestic production and marketing caused by war had not been fully repaired was partly responsible for the price increase during that period. The weighted average of the prices of the items surveyed rose by 14.1 percent in the first three months of 1971 as compared with the average level in 1970 the big jump coming immediately after the arrear were paid. The rate of price increase was substantially lower in 1972 and 1973 partly because of the later year, a new upward tend had begun. It should be pointed out here just the expectation of a general increase in wags and salaries accelerated the pressure on prices, before the submission of the recommendation to the government in 1974.

In a nutshell, a paragraph of the report showed that it will have an adverse effect on the economy, paragraph 712 of the report said that the salary increases being propped which are designed in part to correct the growing disparity between public service compensation and the cost of living and in part to compensate for increasing productivity may be expected to impose severe stress on the nation’s economy.

After the Adebo award came the Udoji award which was more popular and disastrous for to the Nigeria economy in 1974. Infect, it is one of the elements which brought the Nigeria inflation to the rate it is now.

The Udoji commission came as a result of the federal government’s acceptance of the report of the public service review commission, headed by Udoji, otherwise known as Udoji was described as the united grading and salary structure. Infact, it was the Udoji award that increased the salaries of teachers than the commission dealt specifically with the grading and pay of jobs in the public service, though the implementation of the recommendations affected other matters like fringe benefits and allowances, regulation governing personnel management, and the degree of autonomy which parastatals have enjoyed in managing their affair this made two much money to be in circulation, making demand of products to be in excess of supply, which demand of products to be in excess of supply, which in return increase the rate of inflation. The reason behind the above statement is that the award increased the rate of inflation. The reason behind the and salaries of the Nigeria populace.

Furthermore, it has been mentioned before that though inflation and it’s problem have been evident during the past fifteen year, that the situation 1973, and most especially since December, 1974, has been particularly serious.

The cost of loving index as collated from the movements in the prices of consumer goods and service purchased by the lower income group, increased at an average rate of 8.1 percent per annum between 1960 and June, 1975, while the index for food component increased at the of 10.4 percent during the same period other components of the index-clothing, fuel drinks and transportation shared in the increase between 1970 and 1974 average export, price of our main suppliers increased by 67.4 percent and freight changes increased by between 30 and 100 percent. In addition, surcharges amounting to 30 percent of he value of the merchandise in some cases have had to be paid to note too are; the cost of domestic manufactures arising from higher wags costs accompanied in basic service (electricity water supply, transport and communication) high distribution charges and excessive profits and dividends, low productivity of agricultural production in efficient storage and marketing arrangements, arising in part from poor extensive service and mass migration of the young elements of the rural population to urban countries; and monopolistic practices with respect to production, importation and distribution of commodities.


Economic development emphasized increase in per capital income of he under developed counties or developing countries. It implies the transformation of he society structural changes, technological advancement, resource discovery and closing sectional and regional gap etc.

It is evidently believed that inflation and development are related. This could be either that inflation foster economic development or that economic development cause inflation. This issue has long been argued upon by some authors where some argue against inflation as a determinant favour of it.

Starting with inflation fostering economic development, I do not quite agree with the statement.

This is because during inflation, plants and machinery for starting up industries become costlier making it impossible for the public to purchase them. This inability to purchase this thing makes the growth in the member of our industries impossible and this retards economic growth.

Furthermore, let us look at it from the point of view of employment. If there inflation, it means the cost wages has already risen and unless the business can expand to absorb the increased wages retrenchment will follow. It has been noticed in Nigeria that the expansion does not always follow because, the public’s buying power is already reduced. The expansion being sought for cannot come as a result of the above mention reason. This then lead to retrenchment of workers and increase in the rate of un employment which retards economic development.

It should be pointed out as this juncture that the only place where inflation is being matched by increased employment is where there is a strong export culture which Nigeria does not have. Some countries that could be used as examples include Germany Japan and South Korean etc.

In these countries as the wages rise under an inflationary period more people are being limed or given employment in the industries because the factories are not depending on the domestic market. The situation of thing cannot change as long as order continue rolling into the above mentioned countries.

Infact to be precise inflation does not holster economic development with the exception of one situation. This situation is where elite groups like polytechnics, universities oil companies and the army etc move into a place (mostly villages) with higher purchasing power and economic development with the arrival of something like an oil company like shell to a place or even a polytechnic, management will have houses for the staff at higher rents that what the villages pay. This will inflate the prices of house, as most people will fill the business of building houses attractive as it is very profitable. House builders find out they can make same rent in the villages as in towns and this makes then resort to building in villages. This is economic development. This attracts the development of facilities for provision of goods and service to the elite group. Hotels, dry cleaning service, supermarkets, nursery schools and hair salaries etc. also these groups employ the indigenes as gardeners, drivers, cleaners and steward, providing more employment. If it were in the develop countries, real estate companies or individuals would be attracted to the newly developing area.


With common sense, we all know that if there are no adjustments in benefits savings reduce.

This is because it is after satisfying the basis physiological need under situation of declining purchasing power, that you start giving the idea of saving with the banks, have some balance, otherwise it is not remembered.

This then necessitates banks to use an incentive in the way of higher interest rate. Because of this, some people can go out of their way to save their money.

The capacity to save remain the same in united states of America because of the use of automatic escalator clause” which has been discussed before since this not use here in Nigeria the capacity to save falls with the rising prices.


Exports simply refer to those products which a country exchange, across it’s warders for foreign exchange, due to her having economic advantages with regards to those products over others.

Taking cognizance of what is happening in our economy now, the above explanation does not apply dully to Nigeria. This is because most of the raw material being exported now like gains- corn and millet are in short supply within the local economy yet they are being exported out.

During an inflation period, exports be come more expensive. This is because all the productive tools become inflated, which include plant and equipment, raw material, labour and wages etc. When production costs become to expensive export will become un competitive at the world market.


Domestic inflation may spill over to the external section though increased imports. This arises because two major factors may be simultaneously at work.

Firstly because of the public destruct for the value of money during have to find outlets in consumption good.

The consumption good may take the from of imported committees since developing countries are generally know to have developed strong preference for imported commodities



In this chapter attention will be geared towards discussing that question whose responses bear directly on the man issue under study pursuant to this emphasis will be placed on the examination of how house wives adjust incomes towards their desired consumption patters, type of item pursued most and the significant role play by the income levels, among others.

The presentation and analysis of the data will begin by looking at the demographic characteristics of respondent in the Enugu locality.



A summary of the funds is given as follows:

5.1.1 Under inflation, the quantity and quantity of items purchase are considerable influenced more by need than by any other consideration.

5.1.2 Most masses and their families’ find it very difficult to keep to the conventional three square means a day on account of the eroding purchasing power that characterizes this period of inflation.

5.1.3 Most of the masses income does not match with the continued rising prices thereby making their income in sufficient to meet the kind of consumption patterns desired.

5.1.4 The masses consumption patterns were found to tenor more to those thing needed for the sustenance of human lives and satisfaction of the physiological needs.

5.1.5 Ordinary house wives retiree’s civil servants and low income earners are those affected most inflation.


This research work was directed at investigating the impact of inflation on the income and wealth distribution of the nation (A case study of Enugu State).

Consequently, the specific aspects of how housewives manage inflation, how they are affected by inflation and those that are affected most were looked into.

It was found out that house wives manage inflation by allowing needs to influence their purchase more than other variable.

Inflation causes the inability to afford three square meals a day and is a common feature among the masses and their families this is due to high price manifestation especially food related items.

There hypotheses were tasted. The first one tasted which is “purchasers are rational” proved the alternative hypothesis wrong. In favour of the null hypothesis.

The reason being because of the responses from housewives in Enugu locality, where majority favored the point that income does not influence consumption patterns. The third hypotheses tasted says “most housewives and their families find it difficult to maintain three square meals a day and this alternative hypotheses was proved right by the test.

Based on the results of he hypotheses testing suing chi-square as the test statistic it is to say that purchases are rational incomes do not influence consumption patterns and that most housewives and their families find it difficult to maintain the three conventional square meals a day.

Based on the findings and observations gathered a three point recommendation was made it is the belief of he research that they would provide some useful guide on policy formulation and execution.


In the course of he study the researcher found some interesting areas that need further research for the purpose of the society on the impact of inflation on consumption patterns of housewives.

Accordingly, the following area are recommended:

1. The effects of the gradual removal of the remaining percentage of oil subsidy on the consumption patterns of housewives and the general public at large.

2. The socio- economic implication of middle men activities in the distributive trade.



Government should consider the possibility of some but of upward adjustment, especially as it affects the low income earners pensioners or retirees and civil servant are not left in this regard. Their small stipend incomes also need some increment to accommodate the present hard times on the parts of the public they should not over depend on their salaries. Other supplementary source of income like vegetable or crop farming could be taken up.


Sustained and increased effort to subsidize and encourage production of some and services especially with regard to the basic staples is advocated.

Finally bank lending should be increasingly rationalized or streamlined to favour small scale farming and business with finding problems.


The government should try to create awareness among consumers with respect to their purchasing patterns. An emphasis must be their consumption patterns rather than status and other variable. Also if organized consumer boycott is adhered to, organized boycott of expensive or high price goods and service could be the surest and immediate way of hoping with inflation. This campaign which originated from office quarters (Anambra state former commissioner of commerce and industry professor P.N.O Ejifor and then first lady Mrs. M.Babaggids0 could be a success if the public would learn to minimize “irrational and conspicuous buying.


Please just tick into the circle ( ) as it affects you and give reasons for you answer where required. Do not stop yourself from ticking into more than one circle, if more than one answer affect you.

There is no right or wrong answer, so do not hesitate to make your honest response to each question and reason as the case may be.

Also, the questionnaire has part A and B and you expected to respond to both sections please.

As sample of what you are expected to do.

1. Do you like going out with your family on Christmas

Yes ( )

No ( )

2. Give your reasons for action in question1

1 believe Christmas day are supposed to be spent in doors with my family


Now respond to the following questions. Do not omit any number. Tick ( ) as it affects your

1. Which item do you spend more of yam monthly income on

a. Food ( )

b. Clothing plus shoes and bags ( )

c. Toiletries ( )

d. Maintenance ( )

e. Housing ( )

2. Give your reasons for action in question1

3. During inflationary period does your monthly income meet up with the kind of consumption pattern you like?

a. Yes ( )

b. No ( )

4. If NO, how you make up the insufficient monthly income?

a. By crop faming ( )

b. By poultry faming ( )

c. By trading ( )

d. By sowing ( )

e. Try living with the income by lowering my consumption pattern ( )

f. Other (specify) ( )

5. Does your income influence your consumption pattern?

a. Yes

b. Now

6. If you were to have an additional income N100 which of these factors will receive the greatest amount?

a. Food ( )

b. Clothing plus shoes and bags ( )

c. Toiletries ( )

d. Housing ( )

e. Maintenance ( )

f. Others ( specify) ( )

6. Give reason for action in question 6




8. Which of the following factor do consider most in your purchase decision

a. Need ( )

b. Income ( )

c. Price ( )

d. Price of other goods ( )

e. Social status ( )

f. Other (specify) ( )

g. Do you look at thing other than food and shelter (especially clothes and shoes) as luxury

a. Yes ( )

b. No ( )

10. Give reason for your answer in question a

11. Specify which status class you belong to




12. To which sector of the economy do you belong

a. Public sector ( )

b. Civil service ( )

c. Self employed ( )

d. Private sector ( )

e. Retiree (pensioner) ( )

f. Ordinary housewives ( )

13. Which class (es) of housewives suffer (s) most under inflation

a. Civil servants ( )

b. Public servants ( )

c. Self employed housewives ( )

d. Retiree (pensioners ) ( )

e. Ordinary housewives ( )

14. Which income group suffers most during inflation

a. High income earners ( )

b. Middle income earners ( )

c. Low income earners ( )

15. Give reasons for answers to question 13&14




16. Do you (and your family) still afford three square meal a day?

a. Yes ( )

b. No ( )

17. Give reason for answer to question 16




18. Are purchase rational?

a. Yes ( )

b. No ( )

Inflation – Effect On Income & Wealth Distribution Of The Nation: [A Case Study Of The Petroleum Training Institution (PTI) Efuru Warri]

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