Insecurity, Other Factors Drive Inflation Rate To 16.47% As Food Inflation Hits 20.57%
Nigeria’s core inflation rate has risen consecutively to top 16.47 per cent in the first month of 2021 (year-on-year). This is 0.71 per cent points higher than the rate recorded in December 2020 (15.75 per cent).
Increases were recorded in all COICOP divisions that yielded the headline index. Nigeria’s inflation rate has been on steady increase from 11.24 per cent since September 2019. Efforts by the monetary authorities to stabilise inflatiron rate through ortodox and unorthodox means have not yielded the right results.
Composite food index rose by 20.57 percent in January 2021 compared to 19.56 per cent in December 2020. The statistics office blamed the marginal rise in food prices on increases in the prices of farm produce, oils, meat and other items.
“This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, Yam and other
tubers, Meat, Fruits, Vegetable, Fish and Oils and Fats,” the NBS said in the report that was released yesterday.
Some economic experts blame the rising rate of headline inflation on Central Bank of Nigeria’s direct funding of the national budget through Ways-and-Means. Others say the incessant crisis between cattle herders and farmers and rising spate of banditry in the North West as part of the reasons for the hike in prices of food across the country.
Professor of capital market in Nasarawa State University Uche Uwaleke said the hike in food prices reflects the lingering effects of increases in VAT, pump price of fuel and electricity tariffs as well as insecurity and transport bottlenecks.
The inflationary pressure has refused to abate despite border reopening and reduction in levy on imported cars.
“I think the government and the CBN should scale up interventions in Agriculture.
The CBN should equally consider increasing forex supply to bring down exchange rate especially now that crude oil prices are relatively high,” Uwaleke said in his interaction with our correspondent yesterday.
Some experts say the new Service Chiefs that were appointed by president Buhari should roll up their sleeves and confront the seemingly intractable insecurity challenge in the country
On month-on-month basis, the food sub-index increased by 1.83 percent in January 2021, down by 0.22 per cent points from 2.05 percent recorded in December 2020.
Also, average annual rate of change of the food sub-index for the twelve-month period ending January 2021 over the previous twelve-month average was 16.66 per cent, 0.49 percent points higher than the average annual rate of change recorded in December 2020 (16.17 per cent).
On month-on-month basis, the Headline index increased by 1.49 percent in January 2021. This is 0.12 percentage points lower than the rate recorded in December 2020 (1.61 percent).
The percentage change in the average composite CPI for the twelve months period ending January 2021 over the average of the CPI for the previous twelve months period was 13.62 per cent, representing a 0.37
percentage point increase over 13.25 per cent recorded in December 2020.
Urban inflation rate increased by 17.03 per cent (year-on-year) in January 2021 from 16.33 per cent recorded in December 2020, while the rural inflation rate increased by 15.92 per cent in January 2021 from 15.20 per cent in December 2020.
On a month-on-month basis, the urban index rose by 1.52 per cent in January 2021, down by 0.13 percentage points when compared to the rate recorded in December 2020, while the rural index also rose by 1.46 per cent in January 2021, down by 0.12 compared to the rate that was recorded in December 2020
(1.58 per cent).
The corresponding twelve-month year-on-year average percentage change for the urban index was 14.23 per cent in January 2021.
This is higher than the 13.86 per cent reported in December 2020, while the corresponding rural inflation rate in January 2021 was 13.04 percent compared to 12.67 per cent
recorded in December 2020.