The price of a Peugeot 505 wagon in 1975—N1,700—now closely mirrors the current price of a single litre of petrol in Nigeria, which hovers around N1,070, a stark testament to the effects of inflation and economic shifts.
Back in the 1970s, owning a Peugeot 505, a symbol of prestige and reliability, was a major investment for middle-class Nigerians.
Today, that same sum would barely cover the cost of refuelling a modestly-sized vehicle, a comparison that highlights the profound changes in the nation’s economic landscape over nearly five decades.
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The golden years of 1970
For many Nigerians, the 1970s were marked by optimism and economic stability. Oil revenues poured into government coffers, and ambitious infrastructure projects were launched. With a population just exceeding 50 million, Nigeria was better positioned to cater to its citizens’ needs.
The exchange rate of the naira to the U.S. dollar was roughly 1:1, reflecting the naira’s strength and the country’s global economic standing. Basic commodities, including food staples, were affordable. A family could buy a loaf of bread for as little as 5 kobo, and a litre of petrol cost around 6 to 9 kobo.
At N1,700, the Peugeot 505 Wagon was an aspirational purchase but achievable for many middle-class Nigerians, particularly civil servants, professionals, and small business owners. Owning such a car symbolised progress and the realisation of a dream in a country that was poised to rival global economies.
From oil boom to economic fragility
The parallels between the price of the Peugeot 505 in 1975 and today’s petrol costs reflect more than inflation; they underscore decades of missed opportunities and economic mismanagement.
Despite its oil wealth, Nigeria’s economy became overly reliant on crude exports, neglecting sectors like agriculture and manufacturing that had been the backbone of its pre-oil economy.
This dependence became glaringly problematic as global oil prices fluctuated. Further findings showed successive governments struggled to diversify revenue streams, allowing public spending and development plans to hinge precariously on oil prices.
Cost of Living
Today, Nigeria’s population has swelled to over 220 million, intensifying demand for basic goods and services.
Inflation, now in double digits for years, has eroded the purchasing power of the naira. A litre of petrol now costs more than many Nigerians earn in an hour, with the minimum wage set at N70,000 per month—a figure many workers do not receive consistently.
Speaking to this development, Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), hinged the development on how badly the currency has depreciated and the quality of macroeconomic management over time.
He said, “When we have issues with macroeconomic management, it has implications for the strength of the currency. It has implications for inflation and the purchasing power of the people. As far back as 1975, the naira was stronger than the dollar.
“Secondly, it’s also about the capacity to balance our import and export. If your import is so heavily overwhelming compared to your export, it will affect your currency. So, over time, that has also contributed to everything.”
Yusuf said the economy was becoming highly import-dependent and there was no commensurate capacity to generate foreign exchange.
“So, that also contributed to what we have seen over time.
“The macroeconomic issue is about the amount of fiscal deficit that you are incurring. The amount of the rate at which you are printing money. That’s printing the currency to finance the deficit, yes. Because those things also have a way of devaluing the currency,” he added.
Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, pointed to Nigeria’s economic history as the root of today’s issues.
“In the 1970s, Nigeria was flush with oil money, and the naira was stronger than the U.S. dollar. Our failure to reinvest that wealth into diversifying the economy has left us vulnerable to the kind of inflation we see today,” he said.
For many Nigerians, the disparity between the 1975 price of a Peugeot 505 Wagon and today’s petrol costs symbolises the broader decline in living standards.
According to Tunde Oyebanjo, a Lagos-based economist, the current crisis underscores the urgent need for structural reforms.
“The comparison between the Peugeot 505 Wagon’s price and today’s petrol costs is not just a curiosity—it’s a wake-up call. Nigeria must prioritise economic diversification, strengthen the naira through sound fiscal management, and invest in infrastructure to support alternative energy sources like electric vehicles,” Oyebanjo said.
Souring costs
The latest report by the National Bureau of Statistics (NBS) revealed that the average price of a litre of petrol in the country stood at N1,441.28 in October, indicating an increase of 43.41 percent year-on-year.
The hike in petrol prices started with the announcement of petrol subsidy removal by President Bola Tinubu during his inaugural speech in May 2023.
The average retail price of the commodity more than doubled from N238.11 in May to N545.83 in June 2023 after the president’s speech, leading to fuel queues and scarcity, and a hike in transportation fares which fostered a sharp price increase across the board.
On state profile analysis, Ebonyi State had the highest average retail price for petrol at N1292.86, Jigawa and Borno States were next, with N1288.18 and N1283.79, respectively.
In addition, Delta, Nasarawa and Lagos states had the lowest average retail prices for petrol, at N1,050.00, N1,063.68, and N1,080.95 respectively.
Data from the NBS show that Nigeria’s inflation rate rose for the second straight month in October 2024, climbing to a four-month high of 33.9 percent from 32.7 percent in September.
“The rise was driven primarily by escalating food prices, soaring energy costs, and ongoing volatility in foreign exchange markets,” analysts at the NBS said. “Transportation inflation also picked up to 29.3 percent, driven by higher petrol and gas prices after subsidy removal, while housing and utilities inflation rose to 28.8 percent, up from 28.6 percent in September amid higher electricity tariffs,” NBS noted.
Core inflation, which excludes the prices of volatile agricultural products and energy, quickened to an all-time high of 28.4 percent in October, up from 27.4 percent in the previous month. Monthly, consumer prices climbed by 2.6 percent, after a 2.5 percent rise in the previous month.
