Isaac Anumihe, Abuja
Economic experts Tuesday, blamed Nigeria’s rising inflation figures in the month of August to food supply chain disruptions triggered by the rampaging coronavirus pandemic lockdowns and insecurty in major food supply routes across the country. They also described the recent fuel and electricity tariff increases as downside consequences of the inflation figures.
Two university dons who reacted after the release of August inflations figures by the National Bureau of Statistics (NBS) yesterday, said the spike was expected given the untoward consequences of the virus on the various sectors of the economy particularly the food chain subsector. According to the NBS, Nigeria’s inflation which began its upward movement over 27 months ago attained a peak of 13.22 per cent (year-on-year) in August 2020. This, it said, is 0.40 per cent points higher than the rate recorded in July 2020 (12.82 per cent). The Bureau said the increases were recorded in all Classifications of Individual Consumption According to Purpose (COICOP) divisions that yielded the headline index. “This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables” it said.
However, the bureau said that the composite food index rose by 16.00 per cent in August 2020 compared to 15.48 per cent in July 2020 whereas on month-on-month basis, the food sub-index increased by 1.67 per cent in August 2020, up by 0.15 per cent points from 1.52 per cent recorded in July 2020.
But in his reaction to the inflation figures, a former Imo State Finance Commissioner and Professor of Capital Markets at Nasarawa State University, Uche Uwaleke, said the uptick in inflation rate in August was expected and would likely continue till the harvest season sets in, given that the inflationary pressure is coming more from the food component which increased by as much as 16 per cent.
“The economy is still reeling from the negative impact of COVID’19 on the food supply chain. This situation is compounded by the border closure, increase in VAT, electricity tariffs, stamp duties and upward exchange rates adjustment by the CBN in order to ease the pressure on the foreign market.
The recent increase in pump price of fuel presents further downside risks to inflation. There is also the insecurity challenge affecting the food belts of the country which partly explains the high rate of food inflation, at over 20 per cent, in a state like Kogi. The way forward to rein-in inflation is for the government to tackle insecurity so that farmers can return to the farms and put in place a deliberate policy to promote large scale mechanised Agriculture. This will involve scaling up interventions in agriculture, including recapitalising Development Finance institutions such as the Bank of Agriculture. Also reacting, Professor Olusanya Olubusoye, of the Department of Statistics, University of Ibadan, said that the effect of the new inflation figures was that poverty will increase because workers whose income levels have not change since last year will find it difficult to purchase the same items they used to enjoy last year.
“The implication is that cost of living will rise. Things we used to buy at a particular amount last year will now increase. That inflation rate is comparing the situation last year with this year’s rate. For workers who are earning the same amount last year, it means what their salary could buy last year would no longer be affordable this year at the same income level. That means they can’t feed the way they used to feed last year as their purchasing power has come down drastically. So, poverty will increase,” he said.