Declining food prices moderate inflation to 17.75% in June
The recent data provided by the National Bureau of Statistics (NBS) gives an insight into the cost of living in Nigeria, particularly the disparity between living in the urban and rural areas. The NBS data on the consumer price index, (CPI) particularly for all items, indicates that inflation decreased to 17.75 per cent on a year-on-year basis in June 2021. This compares to 17.93 per cent in May 2021 making the June inflation figure the lowest this year with difference of 0.18 per cent over May and an indication that there was a slight moderation in prices of goods and services in June 2021.
From the analysis of the latest inflation data, the decline in inflationary pressures came from farm produce; especially as the second quarter of the year always witness the harvesting of farm produce such as maize, grains, and cereals generally. These farm produce usually provide substitutes to Nigerians, and such development is bound to reduce the demand pressures on consumables.
Although, on the month-on-month basis for “all item” category, May 2021 recorded about 1.01 percent increase in food prices but was higher by 1.06 percent in June 2021, yielding a growth of 5 percent, on a month-on-month basis.
The percentage change in the last 12 months ending June 2021 was 15.93 per cent, and that is an increase of 0.43 per cent over 15.50 per cent in May 2021. The inflation rate for the urban located areas increased by 18.35 per cent on the year-on-year basis in June compared to 18.51 percent in May 2021 respectively, while the rural area recorded an inflation rate of 17.16 per cent in June 2021 up from 17.36 per cent in May, 2021.
The urban CPI increased on a month-on-month basis from 1.04 per cent in May 2021 to 1.09 per cent in the month June 2021, and yielded an increase of 0.05 per cent, while the rural index also increased by 1.02 percent in June 2021, up by 0.04 percent ahead over the rate recorded in May, 2021, which was 0.98 percent. The urban index for the corresponding year on year average percentage change was estimated to be 16.51 per cent in June 2021, yielding an increase of 0.42 per cent, as 16.09 per cent was reported in May 2021. In the rural area, the inflation rate recorded was a bit below the value recorded in the urban areas. The inflation rates recorded in both May and June 2021 were 14.94 per cent and 15.36 per cent respectively, which is an increase of 0.42 per cent in between both months.
Food index price change was also considered necessary to study. It was discovered that the rise in food index was caused by upsurge in some indispensible food items observed to be the choices of most individuals, and these included bread, cereals, milk, cheese and eggs, fish, soft drinks, vegetables, oil and fats and meats, among others.
On the month-on-month basis, the food sub-index shows an increase of 0.06 per cent with a value, 1.11 per cent, in June 2021, from 1.05 per cent recorded in May 2021. The average difference of the food sub-index for the last 12 months up to June 2021 was 19.72 per cent, 0.54 per cent points above the average annual rate of change in May 2021 which was 19.18 per cent.
Another important category of the inflation figures is the “all items less farm produce” which does not consider the prices of volatile agricultural produce. The NBS, recent report on CPI shows that the All items less farm produce index stood at 13.09 per cent in June 2021 while in the earlier month May 2021 it was 13.15 percent showing a difference of 0.06 per cent. It was also discovered that the highest upsurge was recorded in the prices of automobiles-motor cars and vehicle spare parts, passenger travel by air and by road, health care; pharmaceutical products and medical services, clothing and fashion; garments, clothing accessories and shoes, furniture and furnishing.
On a month-on-month basis, this sub-index increased by 0.81 per cent in June 2021, and was down by 0.43 per cent, whereas in May 2021, its inflation rate was 1.24 per cent. The average 12-month annual rate of change of the index was 11.75 per cent for the 12-month period ending June 2021, as this shows a growth of 0.25 per cent relative to 11.50 per cent posted in May 2021.
The NBS also reveals the inflation rates for each of the states in the federation in June 2021. Kogi, Bauchi and Jigawa states situated in Northern region of Nigeria recorded 23.78 per cent, 20.67 per cent and 19.81 per cent respectively, while Cross River with 15.53 per cent, Delta state with 15.18 per cent and Abuja with 15.15 per cent recorded the slowest inflation pressures on a year-on-year inflation.
Kano, Akwa Ibom and Osun states were the most affected states on a month-on-month basis at 2.22 per cent, 1.98 per cent and 1.92 per cent, whereas Bauchi recorded no change in headline; 0.00 per cent on a month-on-month with Abuja and Cross Rivers recording a deflation in price.
On the basis of food inflation, Kogi state’s inflation was at 30.34 per cent, Enugu state had 25.18 per cent, and Kwara state increased by 24.78 per cent, becoming the highest states with inflation on the year-on-year basis, for June 2021.
The states with the least rise in inflation rates on a year-on-year basis were Bauchi, Rivers, and Abuja with 18.97 per cent, 18.92 per cent, and 17.09 per cent respectively. Still on the subject of food inflation, but on a month-on-month basis, in June 2021, the states with the most increase were Jigawa at 2.67 per cent, Edo having 2.43 per cent and Cross River having an increase of 2.16 per cent, while Lagos had 0.14 per cent, Borno had 0.06 per cent, and Kwara recorded 0.02 per cent.
Source: NBS, BRIU