Nigeria’s Inflation hit a new high of 20.77 per cent in September as food supply, foreign exchange crisis, and increases in import costs worsened, according to the National Bureau of Statistics.
In August, the nation’s inflation rose to 17 year high of 20.52 per cent which has now been broken by September’s figure.
The statistics body disclosed this in its ‘Consumer Price Index’ report which was released on Monday. It listed the likely factors for the increase in inflation year-on-year as the disruption in the supply of food products, increase in import cost due to the persistent currency depreciation, and general increase in the cost of production.
It said, “Likely factors responsible for the decline in the monthly inflation rate (Month-on-month basis).
“Over the past two months, there has been a decline in headline inflation on a month-on-month basis due to a decline in the changes in the food index relative to the reference month index which is due to the present harvest season.
“Likely factors responsible for the increase in annual inflation rate (year-on-year basis). Disruption in the supply of food products
“Increase in import cost due to the persistent currency depreciation. General increase in the cost of production.”
The NBS further said, “In September 2022, on a year–on- year basis, the headline inflation rate was 20.77 per cent. This was 4.14 per cent points higher compared to the rate recorded in September 2021, which was (16.63 per cent).
“This indicates that in the month of September 2022 the general price level was 4.14 per cent higher relative to September 2021. On a month-on-month basis, the Headline inflation rate in September 2022 was 1.36 per cent, this was 0.41 per cent lower than the rate recorded in August 2022 (1.77 per cent).”
The report further revealed that urban inflation is now 21.25 per cent while rural inflation rate was 20.32 per cent y-o-y in September.
The NBS revealed that food inflation rose to 23.34 per cent in September, y-o-y, because of increases in the price of bread, cereals, potatoes, yam, oil, fat, and other food products.
It stated, “The average annual rate of food inflation for the twelve-month period ending September 2022 over the previous twelve-month average was 19.36 per cent, which was a decline of 1.35 per cent points from the average annual rate of change recorded in September 2021 (20.71 per cent).”
Inflation is highest in Kogi (23.82 per cent), Rivers (23.49 per cent), and Benue (22.78 per cant), and lowest in Abuja (17.87 per cent), Borno (18.12 per cent), and Adamawa (18.42 per cent).
NACCIMA fumes
Commenting on the increasing rate of inflation, the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, Olusola Obadimu, described any inflation rate that is above 20 per cent as bad for the production sector.
According to him, there is a lack of political will by the managers of the economy to take the decisions needed to address the nation’s mounting economic challenges.
While speaking exclusively to one of our correspondents, he said, “Every fraction of increase is not good. If you listen to foreign news, every fractional increase in inflation is big news. It may look small, but it’s significant.
“Why is it not coming down? Why is it going up? Is it decreasing the cost of doing business or increasing the cost of doing business? That is the critical issue. No matter how small the increase is, it’s not good. Every input that goes into your business has a cost, and when you are budgeting, you must have based your calculations on certain realities. Why are we having over 20 per cent inflation? Anything over 20 per cent is injurious to business health.”
NECA seeks review
According to the Director-General of the Nigeria Employer’s Consultative Association, Wale Oyerinde, the unabated rise in the nation’s inflation has brought to fore the need for the Federal Government to review its monetary and fiscal policies.
He said, “This persistent increase is beyond worry, it has become of great concern in view of the effect on the purchasing power of the generality of Nigerians.
“It is obvious to all discerning individuals that Nigerians and indeed organised businesses are not having the best of times. The current high inflation rate has further brought to the fore the need for Government to take a second look at its monetary and fiscal policies.
“We cannot perpetually ascribe our woes to the war in Ukraine. More focused engagement needs to commence and government must take necessary measures to stop the rapid downward slide, not only of the economy but also of the general standard of living of Nigerians.”
Experts lament
Reacting to the recent data, the Chief Executive Officer, Centre for Promotion of Private Enterprise, and former Director General of Lagos Chamber of Commerce and Industry, Muda Yusuf, said the continuous financing of the Federal Government’s budget by the Central Bank of Nigeria was stifling growth and causing inflation.
He said, “The accelerated growth in fiscal deficit financing by the CBN is boosting liquidity in the economy and have a profound effect of fueling inflation. It is currently around N20tn.
“The CBN financing of fiscal deficit has been elevated to disturbing levels with huge implications for money supply growth and the consequent effect on inflation. It is inflation tax. Elevated inflationary pressures weaken the purchasing power of citizens as real incomes are eroded, increases poverty incidence, aggravates pressure on production costs, negatively impacts profitability, erodes shareholder’s value and undermines investor’s confidence.
“In most cases, increases in production costs cannot be transferred to consumers. The implication is that manufacturers are also taking a hit. This is more pronounced where the demand for the product is elastic.”
He explained that key inflation drivers in the economy have not abated but have only gotten more intense.
The factors include the depreciating exchange rate, rising transportation costs, logistics challenges, forex market illiquidity, hike in diesel cost, climate change, insecurity in many farming communities and structural bottlenecks to production.
Advising the government on how to tackle inflation, he said, “Tackling inflation requires urgent government intervention to address the challenges bedevelling the supply side of the economy and the moderation of fiscal deficit monetization.
“To give producers some succour, the government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists. It is imperative at this point to review the import policy on some food items to provide some succour to citizens in the face of excruciating poverty.
“The CBN also needs to adopt a flexible exchange rate policy to address the problem of acute forex scarcity in the economy.”
