Nigeria’s inflation sees 8th consecutive drop at 15.40%

The National Bureau of Statistics (NBS), on Wednesday, released its consumer price index (CPI) report for the month of November. As expected, headline inflation slowed again to 15.40% from 15.99% in October representing its 8th consecutive monthly decline and the lowest recorded inflation rate in 2021, yet Nigerians remain unimpressed.

Whilst the sustained moderation in inflation was widely anticipated, Nigerians however, have been skeptical about the statistical accuracy of the country’s inflation figures in the past couple of months.

The consistent rise in food items, electricity, gas, and other household goods has gas-lighted a lot of Nigerians and has put the integrity of Nigeria’s official inflation numbers to question.

In the last 8 months, there appears to have been a divergence between the official data and market reality as the price of major commodities like cooking gas, vegetable oil, flour, pasta have surged by over 50% in the last year.

A breakdown of the report showed a broad-based moderation across the inflation baskets. On an annual basis, food inflation declined by 1.07 percent to 17.21 percent, core (inflation less seasonalities) rose by 0.46 percent to 13.85 percent, urban slowed by 0.6 percent to 15.92 percent while rural dropped by 0.59 percent to 14.89 percent. This is largely due to base year effects.

On a monthly basis, the all-items month-on-month inflation rate increased by 1.08 percent in November 2021, this is 0.10 percent rate higher than the rate recorded in October 2021 (0.98) percent, food increased by 1.07 percent in November 2021, up by 0.16 percent points from 0.91 percent recorded in October 2021, core dipped 0.46 percent when compared with 0.80 percent recorded in October 2021.

Read also: Nigeria may hike policy rate to 12.5% in 2022 on slowing inflation – Rencap

Rivers (13.36%) and Edo (13.50%) recorded the lowest inflation rates in October. The states with the highest inflation rates are predominantly in the North – Gombe (18.54%), Jigawa (17.54%), and Nasarawa (17.43%), while Kwara (11.73%), re-emphasizing the impact of insecurity on food production.

The Managing Director and CEO of the Nigeria Sovereign Investment Authority (NSIA), Uche Orji, during a breakfast meeting on Macroeconomic outlook with BusinessDay, stated that the higher prices today are related to the supply-and-demand chain imbalances that can be traced directly back to the pandemic and the reopening of the economy and this has subsequently eroded investment growth by 60 percent in most economies globally this year alone.

“When inflation rises, the government increases interest rates; when you increase interest rates, it makes you take money out of equities and transfer it to savings or other consumptions. However, inflation erodes the value of such, thus if you are saving money in an inflationary environment, you are actually losing money and that would lead to spending.

“Spending, on the other hand, is not a strong base for savings and if you do not have a strong base for savings, the investment would elude such an economy and that is the challenge the world is currently facing,” Orji said.

He further indicated that inflation would also stand as a political liability for the subsequent aspirants in the upcoming 2022 elections, considering that it is making day-to-day life more difficult for many Nigerians, especially those who rely on savings held in relatively low-risk investments like savings accounts or certificates of deposit. Those people are seeing the value of their holdings decrease.

Orji said that inflation in the last 2 years has evolved from being an emerging economic problem to a global one and was not transitory.

“I have come to the conclusion that global inflation is not transitory and this is because the current supply-demand chain disruptions cannot be resolved overnight,” Orji said.

“So, as the world begins to come to terms with it and we start tightening monetary policies, gradual corrections would begin to manifest across various economies of the world in due time,” he added.