Nigeria’s inflation surged to 15.6 percent in May, the highest level in over six years, the National Bureau of Statistics (NBS) has indicated in its Consumer Price report released today. High energy costs compounded by elevated prices of imported food items, reduction in food output, again, weighed on consumer prices which the Central Bank of Nigeria (CBN) sees as a serious concern.
The National Bureau of Statistics said on Tuesday that the ‘Consumer Price Index (CPI) which measures inflation’ showed a relatively strong increase for the fourth consecutive month in May 1.9 percent higher from 13.7 percent recorded in April.
“The increase in rates in May relative to April reflects an overall increase in general price level across the economy as all divisions which contribute to the Headline index increased at a faster pace in May,” the data office noted.
Nigeria’s rising inflationary pressure, especially in recent times have been traced to legacy factors including energy crisis reflected in incessant scarcity of refined petroleum products, exchange rate pass through from imported goods, high cost of electricity, high transport cost, reduction in food output, high cost of inputs and low industrial output.
Year on year, Electricity rates as well as other energy prices continue to manifest as key drivers of the Core component of the CPI.
The Nigerian government deregulated the Petroleum downstream sector and raised pump price of Petroleum Motor Spirit (PMS) by over 70 percent to between N135-N145 per litre. But apart from Lagos which sold the product averagely at N144 per litre, no other state sold cheaper. The national average for fuel in May, according to official data was N150 per litre.
Besides, the economy of Africa’s largest economy is also characterized by high import dependence with the shortage of foreign exchange providing some basis for current price increases.
Though the CBN sees current inflation trend, being largely a product of structural rigidities, it bowed to pressures of allowing the naira to float in May and find its true value rather than long-stance regime of defence against the local currency which created so much arbitrage, depleted the nation’s foreign reserves and dampened confidence.
The NBS reports that Core inflation jumped by 1.7 percent from 13.4 percent in April to 15.1 percent in May.
“The highest increases were seen in the Passenger Transport by Road, Liquid Fuel (kerosene), Fuels and Lubricants for Personal Transport Equipment (Premium Motor Spirit) and Vehicle Spare Parts groups.
The NBS in the report noted that imported foods as well as a draw down of inventories across the country equally continued to push food prices higher.
Food inflation equally showed increased pressure, rising to 14.9 percent in May, up by 1.7 percent from rates recorded in April as all major food groups which contribute to the Food sub-index increased at a faster pace driven by higher food prices in Fish, Bread and Cereals, and Vegetables groups for the second consecutive month.
“All groups which contribute to the index increased with the highest increase recorded in the Bread and Cereals group which increased from 14.5% in April to 16.6% in May,” the NBS noted.
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