Higher Food and Commodity Prices Push Nigeria’s Inflation to 15.63% in December

After eight months of consecutive decline, the Consumer Price Index (CPI) which measures the level of inflation rose to 15.63 per cent year on year in December compared to 15.40 per cent in the preceding month, the National Bureau of Statistics (NBS), disclosed Monday.

The headline index had maintained steady decline from April 2021 to November 2021, before returning to the upward trajectory in December.

Year-on-year, the composite food sub-index stood at 17.37 per cent compared to 19.56 per cent in December, 2020.

According to the statistical agency, the rise in the food sub-index was caused by increases in prices of bread and cereals, food product not elsewhere classified (n.e.c), meat, fish, potatoes, yam and other tuber, soft drinks and fruit.

On month-on-month basis, the food index increased to 2.19 per cent from 1.07 per cent in November.

On the other hand, core inflation which excludes the prices of volatile agricultural produce increased to 13.87 per cent compared to 11.37 per cent in the preceding month.

Inflation stood at 18.12 per cent in April, 17.93 in May, 17.75 per cent June, 17.38 per cent in July, 17.01 in August, 16.63 per cent in September, 15.99 in October and 15.40 per cent in November.

According to the CPI figures for December, the 0.23 per cent increase was occasioned by the increase in prices of goods and services as a result of increase in their demand during the month under review, being a festive season.

Month-on-month basis, the headline index increased by 1.82 per cent in December which is 0.74 per cent higher than the 1.08 per cent recorded in the preceding month.

However, the urban inflation rate stood at 16.17 per cent (year-on-year) compared to 16.33 per cent recorded in December 2020, while the rural index moderated to 15.11 per cent in December from 15.20 per cent 2020.

On a month-on-month basis, the urban index rose to 1.87 per cent compared to 1.12 per cent, while the rural index also rose to 1.77 per from 1.04 per cent.

The NBS noted that, “The change in the declining trend for about eight months might have been caused by the increase in prices of goods and services as a result of increase in their demand during the month under review, being a festive season.”

Commenting on the latest inflation, the Economist/CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, noted that the surge in demand during the December festivities, “must have played a role in the marginal spike and reversal of the deceleration trend in headline inflation.”

Yusuf, who is the immediate past Director General of the Lagos Chamber of Commerce and Industry, added: “Meanwhile, inflationary pressures remain a significant macroeconomic risk in the Nigerian economy. It is a major concern to both businesses and the citizens.”

While stressing that the high inflationary pressures remain a major concern to stakeholders in the Nigeria economy, he listed some of its implications to include escalation of production and operating costs for businesses, leading to erosion of profit margins, drop in sales, decline in turnover and weak manufacturing capacity utilisation.

According to Yusuf, other implications are: “high food prices which impacts adversely on citizens’ welfare and aggravates poverty; weak purchasing power which poses significant risk to business sustainability and price volatility which undermines investors’ confidence.”

In order to tame the current inflationary pressure, Yusuf urged the government need to: “Reform the foreign exchange market to stabilise the exchange rate and reduce volatility; address forex liquidity issues through appropriate policy measures; address the security concerns causing disruption to agricultural activities.

“Address productivity issues in the real sector of the economy; address the challenge of high transportation cost; reduce fiscal deficit financing by the CBN to minimise incidence of high-powered money in the economy, and manage climate change consequences to reduce flooding and desertification.”

James Emejo in Abuja

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