Uche Usim, Abuja
Economic experts have described the August inflation report released by the National Bureau of Statistics as expected given the prevailing rough economic environment.
According to the NBS, the Consumer Price Index, which measures inflation, rose to 13.22 percent in August; higher than the 12.82 percent recorded in July.
This represents the highest increase recorded since October 2016.
“The urban inflation rate increased by 13.83 percent (year-on-year) in August 2020 from 13.40 percent recorded in July 2020, while the rural inflation rate increased by 12.65 percent in August 2020 from 12.28 percent in July 2020.
“The composite food index rose by 16.00 percent in August 2020 compared to 15.48 percent in July 2020”, it added.
Reacting to the development, Nigeria’s first professor of the Capital Markets, Prof Uche Uwaleke said that the uptick in inflation rate in August was expected and will likely continue till the harvest season sets in.
“This is particularly so given the fact that the inflationary pressure is coming more from the food component which increased by as much as 16%. It is not difficult to see where the pressure is coming from.
“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 forex 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%, in a state like Kogi.
“As I mentioned earlier, I expect the inflation rate to moderate towards the end of Q4 2020 in the wake of the harvest season as well as a likely increase in external reserves following gradual recovery in crude oil price which helps stabilise Exchange rate.
“I also think the COVID-19. interventions by the government and the CBN especially in the Agric value chain will begin to manifest in Q4 2020”, he stated.
Uwaleke said that the way forward to rein-in inflation was 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 mechanized agriculture.
“This will involve scaling up interventions in Agriculture including through recapitalizing Development Finance institutions such as the Bank of Agriculture”, he added.