Nigerians have disagreed with the National Bureau of Statistics ( NBS) over the July inflation figures it released on Tuesday.
NBS had reported that the headline inflation rate for the month of July 2023 increased to 24.08 percent compared to 22.79 percent recorded in June 2022. But a cross section of Nigerians who spoke with FinancialTrust.com said the figures from NBS do not in any way reflect what is happening in reality.
The latest report by the NBS, which is the July inflation figures, show a seven month consecutive rise in the nation’s inflation rate, defying efforts by the Central Bank of Nigeria (CBN) to keep it down through various monetary policy measures.
NBS, in the report, said the rise represented an increase of 1.29 percent points from the June 2023 headline inflation.
The report stated that the increase in the headline index for July 2023 was attributed to an increase in contributions of some items in the basket of goods and services at the divisional level particularly the Food & Non-Alcoholic Beverages which contributed 12.47 percent. Other contributors it said include, Housing, Water, Electricity, Gas & Other Fuel with 4.03 percent, Clothing & Footwear, 1.84 percent, Transport, 1.57 percent, Furnishings & Household Equipment & Maintenance, 1.21 percent, among others.
With the removal of fuel subsidy at inception of the present administration, prices of goods and services doubled and in some cases tripled, driven by the sudden increase in the cost of transportation.
As a way to cushion the effects of the subsidy removal, the Federal Government rolled out some palliative measures including the directive that fertilizers should be made available to farmers and also that grains should released from the Strategic grains reserve to reduce the prices of these grains in the market.
However the impact of these measures have not reflected in the prices in the market.
The CBN on its part also raised the Monetary Policy Rate from 18.5 percent to 18.75 percent all in the bid to control inflation.
Recently the Institute of Chartered Secretaries and Administrators of Nigeria, (ICSAN) advised the Federal Government and the CBN to find other means of reining in inflation beyond just raising the Monetary Policy Rate (MPR).
Speaking at a media interactive session, the President/Chairman of Council, ICSAN, Mrs. Funmi Ekundayo, noted that CBN has increased MPR about four times by a total of about 225 basis points this year with little or no impact on inflation.
According to her, “I think this year alone CBN has increased MPR about four times by a total of about 225 basis points. That is huge. But what do we see? Has it had any impact on inflation? I will say no.
“So I think that it is very important for CBN to look beyond this orthodox method because it doesn’t look like it is working for us. I believe that the government should look beyond the management of interest rates to curb inflation.
“There are so many areas the government can look into to make the economy more efficient.
“There is a need to increase real investment in infrastructure for instance. And I think for CBN as well, economic policies should be made taking cognizance of our own peculiarities and what would work for us.
“The government should also try to reduce leakages in the system because at the end of the day, when you look at the cost of governance all of these have a direct impact on growth and the ability of the government to invest.”
Analysis had predicted that the full impact of the fuel subsidy removal on the rate of inflation would be felt from July with some predicting that the inflation will hit as high as 30 percent.
The Chief Executive Officer of Dairy Hills Limited, Kelvin Emmanuel, admitted that headline inflation numbers for July at 24.08 per cent and food inflation at 26.98 per cent, are still not an accurate representation of the hike in energy and food prices the country has experienced from the deregulation of petrol pricing and devaluation of the naira, it is an indication that at monetary policy committee has to hike MPR by at least 100 basis points at the next MPC meeting.
He argued that deposit money banks embarking on fund raising exercises to not only shore up their total capital as a tool to maintaining their capital adequacy ratio on rising non-performing loan books, it is also an indication that the apex bank might soon call for capital revaluation exercise of gearing ratio.
He added: “Nigerians will have to brace up for higher commercial lending rates, higher bond yields as the government experiences higher premiums to borrow from the markets, less access to commercial loans, as the banks weigh the ability of customers to pay back interest and principal in this very tough economic environment.”
The Lead Director Centre for Social Justice (CSJ), Mr. Eze Onyekpere in his reaction to the figures released by the NBS, said the result is not reflecting the true state of inflation in Nigeria.
According to him, “That figure cannot possibly be true as everyone knows that the prices of goods and services have more than doubled. So on what basis are they giving us the figures they have?
“We had thought that maybe in June the increases in the cost of energy has not reflected but that excuse is no longer tenable today. They need to explain to Nigerians how they arrived at the rate they are presenting.”
He said the prices of goods and services in the market are far higher than this. “It appears they have started politicizing the work of the Bureau and that is unfortunate. It looks like everything is now propaganda,” he said.
Also reacting, the CEO of the Centre for the Promotion of Private Enterprise ( CPPE), Dr. Muda Yusuf said the NBS has its own methodology, but unfortunately most times their methodology does not reflect the experience of the ordinary people.
He said, “The ordinary people will be looking at the things that they buy on a daily basis, they look at food, they look at transportation, they look at energy and pharmaceuticals and if you look at the way the prices of these things have jumped, it is much more than what NBS is reporting.”
He said NBS methodology doesn’t reflect how people feel about prices. He added that the inflation will continue to go up except government responds in the right way.
“I heard the Managing Director of the Nigerian National Petroleum Company Limited ( NNPCL) assuring that despite the rise in forex, there would be no increase in fuel price. At least that one can help to keep the rate down, but if not, we are in for further rise and that will worsen the already harsh economic situation.”
He said as regards the forex issue, “there is need for us to carry out a research to determine how deep the parallel market is to enable us to know the kind of weight we can attach to it, because what makes headlines is the rate at the parallel market; nobody talks about the official rates. So it is good for us to know what percentage of our transactions is in the parallel market and what percentage is from the official market.”
In his own reaction, the National President of All Farmers Association of Nigeria (AFAN), Arc. Kabir Ibrahim said what is happening in reality is much more than what NBS is reporting. “I’m sure NBS is trying to moderate the figures, but I won’t blame them because they have their own parameters, but as a layman, what I am seeing is much more than their figures,” he said.
He said many people are hungry and cannot afford to buy food. “I know the number of requests I’m getting even from people I thought should be better off. Things are really tough,” Ibrahim said, adding,
“Unfortunately we cannot feel the effect of the palliatives now, we cannot get the result this year because the fertilizer they say they are giving to farmers, cannot produce any result until the harvest season, that means it is going to get worse, it is only from next year that we will feel the positive effect, but that is if we are able to get it right.
“These people said they are experts in financial matters, but we have not seen it, even though we were saying that Buhari was under some sort of spell, what we are seeing today is even worse than Buhari’s time.”