Tanko Mohammed
National Bureau of Statistics (NBS) has report showing Nigeria’s inflation rate rising from 14.89 per cent in November, 2020 to 15.75 per cent in December.
The new rate contained in the data titled “Consumer Price Index December 2020” and posted on NBS’ website represents the highest since 2017.
The document said: “The consumer price index (CPI) which measures inflation increased by 15.75 per cent (year-on-year) in December 2020. This is 0.86 per cent points higher than the rate recorded in November 2020 (14.89) per cent.”
According to NBS, the corresponding twelve-month year-on-year average percentage change for the urban index is 13.86 per cent in December 2020.
It noted that this is higher than the 13.55 per cent reported in November 2020, while the corresponding rural inflation rate in December 2020 was 12.67 per cent compared to 12.35 per cent recorded in November 2020.
The data noted that the percentage change in the average composite CPI for the 12-month period ending December 2020 over the average of the CPI for the previous 12-month period was 13.25 per cent, representing 0.33 per cent point increase over the 12.92 per cent recorded in November 2020.
According to NBS, increases were recorded in all COICOP divisions that yielded the headline index.
On a month-on-month basis, the urban index rose by 1.65 per cent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 per cent in December 2020, up by 0.02 per cent above the rate that was recorded in November 2020 (1.56 per cent).
The data said on month-on-month basis, the Headline index increased by 1.61 per cent in December 2020.
NBS said this is 0.01 percent rate higher than the rate recorded in November 2020 (1.60 per cent).
Continuing, the report said urban inflation rate increased by 16.33 per cent (year-on-year) in December 2020 from 15.47 per cent recorded in November 2020, while the rural inflation rate increased by 15.20 per cent in December 2020 from 14.33 per cent in November 2020.
NBS said the composite food index rose by 19.56 per cent in December 2020 compared to 18.30 per cent in November 2020.
It further noted that the average annual rate of change of the food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 per cent, 0.42 per cent points from the average annual rate of change recorded in November 2020 (15.75) per cent.
The document said: “This rise in the food index was caused by increases in prices of Bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.
“On month-on-month basis, the food sub-index increased by 2.05 per cent in December 2020, up by 0.01 per cent points from 2.04 per cent recorded in November 2020.”
Reaction
Experts identified the lingering insecurity challenges in food-producing parts of Nigeria as one of the major factors fuelling the surge in food inflation as the country’s inflation rate jumped to its highest level in more than three years.
Inflation rose to 15.75 per cent in December from 14.89 per cent in December, marking the 16th straight month of increases, data released on Friday by the National Bureau of Statistics showed.
The consumer inflation rate in December was the highest since November 2017 when it stood at 15.90 per cent.
The NBS said the composite food index rose by 19.56 per cent in December from 18.30 per cent in November.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats,” it added.
The core inflation, which excludes the prices of volatile agricultural produce, stood at 11.37 per cent in December, compared with 11.05 per cent in November.
The highest increases were recorded in prices of passenger transport by air, medical services, hospital services, shoes and other footwear, and passenger transport by road, among others, according to the NBS.
The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, said the inflationary pressures were coming particularly from volatile food items.
He said, “We must recognise that the disruption we have had in the northern part of the country in terms of food production has a direct impact on food inflation.
“We should expect these pressures to continue in the next couple of months. We should expect that the price of diesel will further increase because crude oil price has moved up and exchange rate has also deteriorated.”
A professor of capital market at the Nasarawa State University Keffi, Uche Uwaleke, said the inflation rate for December was exacerbated by the lingering effects of border closure, increase in Value Added Tax, electricity tariffs and the pump price of fuel.
“Insecurity may have also accounted for why the food inflation was highest in a state like Edo. The rate of increase in urban inflation gives cause for worry. This may not be unconnected with the rise in rural-urban migration,” he said.
According to him, given that food inflation remains the major challenge, the inflation rate is expected to moderate this year following the intensification of the Central Bank of Nigeria’s interventions in agriculture and improvements in forex supply, the implementation of the 2021 agriculture budget and transport infrastructure, border reopening as well as improvements in security.
“It is important that the relevant agencies of government plans ahead to tackle flooding issues detrimental to the farming season.”
Analysts at the Financial Derivatives Company Limited, led by foremost economist Bismarck Rewane, had last week predicted that headline inflation would increase by 0.51 per cent to 15.4 per cent in December, describing it as “a hydra-headed monster that has eroded the disposable and discretionary income of consumers”.
“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs,” they said.
The analysts noted that consumer disposable income had been negatively affected by the hike in electricity tariffs, general reductions in subsidies and improved tax mobilisation.
“We believe the sustained pressure in the food basket is reflective of the impact of the underwhelming harvest season, persistent security challenges in the food-producing regions, and festive induced demand which further widened the demand-supply imbalance,” Cordros Capital Limited said in an emailed note on Friday.
