Nigeria’s Inflation Rises To Two Years High At 13.22 Per Cent

The National Bureau of Statistics (NBS) yesterday said inflation rate increased by 13.22 per cent (year-on-year) in August compared to the 12.82 per cent rate recorded in July.

This was contained in its Consumer Price Index (CPI) August 2020, published on its website.

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The NBS explained that the increase recorded was 0.40 per cent points higher, according to the consumer price index which measured inflation.

The Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele yesterday said: “Inflation will continue to tick upwards until sometime in December 2020 when the effects of harvest fully manifest”.

He spoke in Abuja at the 13th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN).

According to Emefiele, “inflation was exacerbated by the increase in VAT (Value Added Tax) rate, exchange rate adjustment and seasonal food supply shocks due to the onset of the farming season and other structural bottlenecks.”

“However, with the increase in price of energy and electricity for the manufacturing companies, that will lead to import inflation because our economy is significantly import dependent” he said.

According to NBS, increases were recorded in all Classification of Individual Consumption According to Purpose (COICOP), divisions that yielded the Headline index.

“On a month-on-month basis, the Headline index increased by 1.34 per cent in August 2020. This is 0.09 per cent higher than the rate recorded in July 2020 (1.25 per cent).

“The percentage change in the average composite CPI for the 12 months ending August 2020 over the average of the CPI for the previous 12 months was 12.23 per cent, representing a 0.18 per cent point rise from 12.05 per cent recorded in July 2020.”

The report stated that the urban inflation rate increased by 13.83 per cent (year-on-year) in August from 13.40 per cent recorded in July.

Meanwhile, the rural inflation rate increased to 12.65 per cent in August from 12.28 per cent in July.

Monthly, the urban index rose by 1.42 per cent in August, up by 0.15 from 1.27 per cent recorded the previous month.

The rural index also rose by 1.27 per cent in August, up by 0.04 from the rate recorded in July 2020 (1.23 per cent).

“The corresponding 12-month year-on-year average percentage change for the urban index was 12.85 per cent in August,’’ it said.

“This is higher than 12.66 per cent reported in July, while the corresponding rural inflation rate in August was 11.66 per cent compared to 11.49 per cent recorded in July,” the report stated.

Also, the composite food index rose by 16.00 per cent in August compared to 15.48 per cent in July.

The rise, according to NBS, is caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables.

Monthly, the food sub-index increased by 1.67 per cent last month, up by 0.15 per cent points from 1.52 per cent recorded the previous month.

Furthermore, the average yearly rate of change of the Food sub-index for the 12 months ending August over the previous 12-month average was 14.87 per cent.

This represented a 0.24 per cent points increase from the average annual rate of change recorded in July (14.63 per cent).

The “All items less farm produce” (or core inflation), which excludes the prices of volatile agricultural produce, stood at 10.52 per cent in August.

The rate recorded an increase of 0.42 per cent compared with 10.10 per cent recorded in July.

On month-on-month basis, the core sub-index increased by 1.05 per cent in August.

The increase was up by 0.30 per cent when compared with 0.75 per cent recorded in July.

The highest increases were recorded in prices of passenger transport by air, hospital services, medical services, pharmaceutical products, maintenance and repair of personal transport equipment.

Others are vehicle spare parts, motor cars, passenger transport by road, miscellaneous services relating to the dwelling, repair of furniture and paramedical services.

The average 12-month annual rate of change of the index was 9.64 per cent for the period ending August.

This represented 0.16 per cent points higher than 9.48 per cent recorded in July.

All items index on year-on-year basis was highest in Kogi recording 17.29 per cent, Bauchi with 15.77 per cent, and Ebonyi and Yobe with 14.71 per cent each.

Meanwhile, recording the slowest rise in headline year-on-year inflation were Lagos (11.45 per cent), Kwara (11.22 per cent) and Abuja (11.17 per cent).

On month-on-month basis, however, all items inflation was highest in Ondo (2.20 per cent), Ogun (2.07 per cent) and Abia (1.87 per cent).

Meanwhile, while Plateau (0.72 per cent), Zamfara (0.60 per cent) and Sokoto (0.54 per cent) recorded the slowest rise in headline month-on-month inflation.

The Federal Government gave banks marching orders to key into its economic restructuring measures and rely less on regulatory relaxations and other measures.

President Muhammadu Buhari gave the order in Abuja at the CIBN forum. Represented by the Minister of Finance, Budget and National Planning Mrs Zainab Ahmed, the president said the government, working in “with regulatory authorities had stepped forward with various liquidity, monetary, prudential and supervisory measures in the form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing and forbearances on asset provisioning”.

This framework the president said is a well thought-out decision taken in consultation with stakeholders and is aimed at striking a balance between protecting the interest of depositors and maintaining financial stability

 

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