The Composite Price Index (CPI), which is a measure of the general change in the prices of consumer goods and services purchased by households over a period, rose by 11.40 percent on a year-on-year basis in May.
This represents 0.03 percentage point higher than 11.37 percent recorded in the previous month, and the highest inflation rate recorded by the country since December 2018.
Food inflation accelerated for the second consecutive month by 13.79 percent in May from a year earlier compared with 13.70 percent recorded in April. However, core inflation, which captures all items, but exempts the prices of volatile agricultural produce, moderated to 9 percent to reach its lowest level in over three years.
As a result, the high inflationary pressures on household items was largely driven by heightened food inflation on the back of the commencement of rainy season which signals planting season for agricultural products, a development that has left limited farm produce in the market for consumption.
The major driver of the “increase in the inflation rate is the increase in food prices, due to the seasonality effect typically associated with the onset of the planting season”, analysts at Lagos-based FSDH Research, the research arm of the FSDH Merchant Bank Limited, said in a note to clients.
Besides this, FSDH attributed the fast-paced inflation rate to the security challenges in some food producing regions in the country. This has reduced the supply of food items even as demand persisted, leading to an increase in prices.
At the current level, the nation’s headline inflation remains higher than the threshold of 6 percent to 9 percent set by the Central Bank of Nigeria (CBN). The index has remained in the double-digit trajectory since February 2016 when it rose 11.38 percent.
“Given current realities, the inflation rate will remain above the CBN’s target in the short-to-medium-term,” FSDH stated. “This may reduce the real yield on fixed income securities.”
On a month-on-month basis, the country’s headline inflation maintained its upward momentum by 1.11 percent in the review month from 0.94 percent recorded in April. Food inflation jumped by 1.41 percent from 1.14 percent, while core inflation quickened by 0.75 percent from 0.70 percent.
The urban inflation rate increased by 11.76 percent on a year-on-year basis in May 2019 from 11.70 percent recorded in April 2019, while the rural inflation rate rose by 11.07 percent in May 2019 from 11.08 percent in April 2019.
Also, on a month-on-month basis, the urban index rose by 1.15 percent in May 2019, this represents 0.15 percentage point from 1 percent recorded in April 2019, while the rural index also rose by 1.07 percent in May 2019, indicating 0.17 percentage point from its April 2019 level of 0.90 percent.
The headline inflation was highest in Kebbi at 15.76 percent; Bauchi, 14.97 percent; and Kaduna, 13.74 percent in May 2019, while Abia with 9.91 percent inflation rate; Cross River, 9.68 percent; and Kwara 8.45 percent recorded the slowest rise in the index for the month under from a year earlier.
OLUWASEGUN OLAKOYENIKAN
