By Adewale Sanyaolu, Isaac Anumihe, (Abuja), Merit Ibe and Chinwendu Obienyi
The National Bureau of Statistics (NBS) says Nigeria’s headline inflation rate rose to 20.52 per cent on a year-on-year basis in August from 19.64 percent last month.
This is according to the NBS Consumer Price Index(CPI) and Inflation Report for August released in Abuja, yesterday.
The report says the figure is 3.52 per cent points higher compared to 17.01 per cent recorded in August 2021.
“This shows that the headline inflation rate increased in August 2022 when compared to the same month in the previous year.
“Meaning that in August 2022, the general price level was 3.52 per cent higher relative to August 2021,” the NBS stated.
According to the report, factors responsible for the increase in Nigeria’s annual inflation rate include disruption in food supply chain.Other factors were increase in import cost due to the persistent currency depreciation and a general increase in the cost of production.
“This means that in August 2022 the headline inflation rate on a month–on–month basis declined by 0.05 per cent,” said the report.
The report also noted that the factor responsible for the decline in the monthly inflation rate is a decline in the current month’s food index relative to the reference month index, which is due to the harvest season as well as the relative stability in transportation cost with the availability of fuel.
Commenting on the inflation figures , Founder, Centre for values and leadership, Prof Pat Utomi, said the Central Bank of Nigeria(CBN) has lost one of its core mandate which is to control inflation. He said the CBN was rather focusing on areas where it ought to have no business all.
According to him, the implication of the growing inflation is that more Nigerians would be pushed below the poverty net while eroding investors confidence.
He added that the inability of the Federal Government to control oil theft which has seen the country consistently miss its OPEC target was equally responsible.
To reverse the trend, he said Government should bring its extravagant cost to governance to check while the CBN should be more alive to its responsibility.
For their part, analysts at Cordros Research stated, “In our July inflation note, we expected consumer prices to maintain their uptrend and settle at 20.52 per cent year-on-year (y/y) in August, given the troika impact of unfavourable base effect from the prior year, lingering spillover impact of rising transport cost and blend of currency and energy cost pressures.
True to our prognosis, recently released data by the National Bureau of Statistics (NBS) showed that the headline inflation increased by 88 basis points (bps) to 20.52 per cent y/y in August as against July’s 19.64 per cent y/y).
The last time consumer prices were around this level was in September 2005, when the inflation rate settled at 24.32 per cent y/y. Decomposing the breakdown, price pressures were significant across the food (+110bps to 23.12 per cent y/y) and core (+94bps to 17.20 per cent y/y) baskets. On a month-on-month basis, headline inflation eased by 5bps to 1.77 per cent.
On a balance of factors, we expect the pressure on consumer prices to be maintained, and we now see the headline CPI at 1.70 per cent month-on-month (m/m) in September, with the unfavourable base effect in the corresponding period of 2021 cascading to a 66bps increase in y/y inflation rate to 21.18 per cent.
Also commenting, an economist and Founder/CEO Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, CEO, noted that the heightened inflationary pressures in the Nigerian economy remains very troubling with Headline inflation surging to 20.52 percent in August. Even more worrisome is the spike in food inflation to 23.12per cent.
However, on a month on month basis, there was a marginal drop in Headline inflation by 0.05per cent.
These factors include high transportation costs, Increasing logistics challenges, worsening exchange rate depreciation, forex liquidity issues, hike in energy prices, climate change issues, insecurity in many farming communities and structural bottlenecks to production. These are basically supply side issues. The accelerated fiscal deficit financing by the CBN is also a significant inflation driver. The financing of fiscal deficit has been elevated to disturbing levels at almost N20 trillion. This has huge implications for money supply and knock on effect on inflation. CBN financing of deficit is high powered money and very inflationary. It is inflation tax.
Frank Onyebu, chairman, Manufacturers Association of Nigeria (MAN), Apapa branch. We are not producing that is basically the issue. How can the economy grow when factories are not doing well. The farms have been shut down due to insecurity, and the population is increasing. So we don’t expect anything other than the obvious. That is just the stack reality of today’s Nigeria.