By Clara Nwachukwu
Nigeria’s headline inflation raced to a new 17-year high to 20.77% in September, on the back of soaring food prices, disruption in food supply chain, rise in import cost due weakening naira, and increase in the cost of production.
Latest figures from the National Bureau of Statistics (NBS), yesterday, indicate that apart from being the highest since 2005, the rate has risen for the eighth consecutive month this year.
The NBS Consumer Price Index (CPI) for September 2022, also showed that year–on-year (y/y), the headline inflation rate was 4.14% higher compared to the rate recorded in September 2021 – 16.63%.
“This indicates that in the month of September 2022 the general price level was 4.14% higher relative to September 2021. On a month-on-month basis, the Headline inflation rate in September 2022 was 1.36%, this was 0.41% lower than the rate recorded in August 2022 (1.77%).
“This means that in the month of September 2022, the headline inflation rate (month–on–month basis) declined by 0.41%, relative to August 2022.
“The percentage change in the average CPI for the twelve month period ending September 2022 over the average of the CPI for the previous twelve month period was 17.43%, showing a 0.60% increase compared to 16.83% recorded in September 2021,” the report said.
The high rate of food inflation was due to increases in prices of bread and cereals, Food products, Potatoes, yam, and other tuber, oil, and fat.
Other highlights
Other highlights of the CPI showed Core inflation rose to 17.60%; Food inflation at 23.34%; Urban Inflation 21.25%; and Rural Inflation rose to 20.32%.
Broken further, the “All items less farm produce” or core inflation, including the prices of volatile agricultural produce, stood at 17.60%, up from 17.2% recorded in August 2022.
The highest increases were recorded in the prices of gas, liquid fuel, passenger transport by air, passenger travel by road, and solid fuel.
Disruptions in the supply chain on account of on-going war in Ukraine, leading to high cost of importation and heavy floods in about 27 of the 36 states pushed food inflation to 23.34% y/y or 3.77% above the September 2021 rate of 19.57%.
The report attributed the rise to “increases in prices of bread and cereals, Food products, Potatoes, yam, and other tuber, oil, and fat.”
On a month-on-month basis, the food inflation rate in September was 1.43%, a 0.54% decline to the 1.98% recorded in August 2022, due to a reduction in prices of some food items like Tubers, Palm oil, Maize, Beans, and Vegetables, the report said.
The average annual rate of food inflation for the 12-month period ending September 2022 over the previous 12-month average was 19.36%, a 1.35% fall from the 20.71% recorded in September 2021.
On a year-on-year basis in September, the urban inflation rate was 4.06% higher compared to the 17.19% recorded a year earlier, while month-on-month (m/m) it fell slightly lower by 0.34% to 1.46% compared to 1.79% in August.
The corresponding 12-month average for the urban inflation rate was 17.94% in September 2022 or 0.53% higher than the 17.41% reported in September 2021.
Rural inflation on the other hand was higher by 4.24% at 20.32% y/y in September against 16.08% recorded in September 2021. But the rate settled lower by 0.48% m/m at 1.27% in September, compared to 1.75% August 2022.
The corresponding 12-month average for the rural inflation rate in September 2022 was 16.94% – 0.68% above the 16.26% recorded y/y.
Globally, Central Banks, including Nigeria’s, have been tightening monetary policy policies through higher rates to reign in galloping inflation.
Analysts expect the CBN to hike rates yet again at its November Monetary Policy Committee (MPC) meetings, having done so for three consecutive months.
But the International Monetary Fund, in its latest Global Financial Stability Report, released at the just-concluded IMF/World Bank Group Annual meetings in Washington DC, urged Central banks to “act resolutely to bring inflation back to target and avoid a de-anchoring of inflation expectations, which would damage their credibility.”
