Nigeria’s headline inflation rate has accelerated for the ninth consecutive month to 21.09 percent in October 2020 from 15.60 percent in January, according to the National Bureau of Statistics (NBS).
In its recent Consumer Price Index report, the official statistics agency said the disruption in the supply of food products, increase in cost of importation due to the persistent currency depreciation, and general increase in the cost of production were the factors responsible for the increase.
“In October, on a year–on–year basis, the inflation rate was 21.09 percent. This was 5.09 percent points higher compared to the rate recorded in October 2021, which was 15.99 percent,” it said.
Food inflation rate in October rose to 23.72 percent from 23.34 percent in September. “The rise in food inflation was caused by increases in prices of bread and cereals, food products, potatoes, yams and other tubers, oil and fat.”
The economy continues to be pressured by supply chain bottlenecks, foreign exchange volatility due to speculation and heightened political activity and anaemic demand, said Ikemesit Effiong, head of research at SBM Intelligence.
“Without substantial positive changes in these underlying factors, inflation will continue to accelerate and break records and household spending will continue to remain weak, depressing holiday shopping,” Effiong said.
He said this will add further pressure on corporate bottom lines at a time of the year when spending typically picks up.
There are expectations that the country’s inflation rate would increase further in the coming months on the back of the floods that ravaged many parts of the country.
With food inflation likely to increase further over the coming months, and price pressures showing no sign of abating, they expect the headline rate to keep rising into early months of 2023, said analysts at Capital Economics, a London-based economic research firm.
This year’s flood incidents, which started in September, have destroyed 70,566 hectares of farmland, damaged 45,249 houses and displaced over 1.4 million Nigerians, with about 600 persons reported dead.
The floods, described as the worst in a decade, have been attributed to the release of water from the Cameroonian Lagdo dam, which affected Nigeria because of its lack of flood defence mechanism. The Dasin Hausa Dam, which should have been built 40 years ago, would have been able to cushion the effect of whatever came from Lagdo.
Data from the United Nations Office for the Coordination of Humanitarian Affair, World Food Programme, and Telimer Research show that Nigeria has the largest number of people (3,480) hit by flooding among 19 African countries.
Muda Yusuf, chief executive officer at Centre for the promotion of private enterprise said, tackling inflation requires urgent government interventions to address the challenges bedeviling the supply side of the economy, addressing production and productivity constraints, fixing the dysfunctional forex policy, and institution of fiscal reforms to curb escalating deficit spending.
“To give producers and citizens some relief, the government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists, especially those in the food processing segments of the agriculture value chain,” he said.