Consumer items will probably come at higher prices during this year’s yuletide season compared with last year’s, as the effect of border closure reverberates across the country. But that’s if history is any guide.
Nigeria’s inflation accelerated by 11.61 percent in October from a year earlier compared with 11.24 percent recorded in September, according to recent data from the National Bureau of Statistics (NBS).
The latest inflation reading, which is the highest in 17 months, was triggered by escalating food prices amid harvest season as food inflation increased by 14.09 percent – the most in 18 months, no thanks to the recent border closure and its spillover effects on food supply.
Within the last 11 years, history has it that a faster pace of increase in October inflation was followed by higher inflation figures in the last two months of the year.
For instance, in 2016 when the Nigerian economy was in recession, the headline inflation rose 18.33 percent on a year-on-year basis from 17.85 percent. Inflation in the succeeding months of the year printed 18.48 percent and 18.55 percent.
While the increased consumer prices may not be unconnected to the nation’s economic downturn in the year, a similar trend was observed in 2012 when inflation rate quickened in October. Consumer prices rose accelerated by 11.7 percent in the month, while the index stood higher in November and December at 12.3 percent and 12.0 percent, respectively.
The same situation was also witnessed in 2009 and 2008, further suggesting that Nigeria could be bracing up for another yuletide of higher prices this year as frontloaded festive demand may further bloat food prices and overall inflation reading in November and December, according to Lagos-based investment house CardinalStone.
“This is likely to translate to further erosion of consumers’ purchasing power, which had already been shaved by the combined impact of naira depreciation and weak wage growth in recent years,” analysts at CardinalStone said in a recent note to clients.
Food items such as bread & cereals, fish, meat, potatoes, and yam tuber food classes among others recorded the highest price increases in October, according to NBS data. But CardinalStone believes this price pressure could extend to some non-food items as traders adjust to the reality of the rising cost of living.
“We expect the recent uptick in inflation to subsist in the near term and forecast inflation at 11.82% YoY in November, contributing to an average inflation forecast of 11.40% in 2019,” the note read.
OLUWASEGUN OLAKOYENIKAN
