Economic crisis, job losses worsen, food prices soar
Nigeria’s inflation rate reached a 20 per cent mark in August 2022, reflecting the rising cost of living crisis facing Nigerian families and firms.
It was the biggest inflation numbers since October 2005 with the cost food hitting 23.12 per cent on a year-on-year basis, representing a 2.82 percent increase from 20.30 per cent in August 2021.
On a month-on-month basis, inflation rose to 20.52 per cent in the month of August, from 19.64 per cent in July, according to the latest Commodity Price Index report published by the National Bureau of Statistics on Thursday.
The CPI measures the average monthly change in the prices of goods and services in a nation.
According to the NBS, the inflation rate was 3.52 per cent points higher compared to the rate recorded in August 2021, which was 17.01 per cent.
This means that in August 2022, the general price level was 3.52 per cent higher relative to August 2021.
The percentage change in the average CPI for the 12-month period ending August 2022 over the average of the CPI for the previous 12- month period was 17.07 per cent, showing a 0.47 per cent increase compared to 16.60 per cent recorded in August 2021.
According to the statistics body, the Increases were recorded in all classifications of individual consumption by purpose divisions that yielded the headline index.
Rising cost
A further breakdown of the CPI report showed that urban inflation stood at 20.95 per cent, while rural inflation was 20.12 per cent. Food inflation, on the other hand, also rose to 23.12 per cent.
The report also said the food inflation rate in August 2022 was 2.82 per cent higher compared to the rate recorded in August 2021 (20.30 per cent).
This rise in the food inflation was caused by increases in prices of bread and cereals, food products, potatoes, yam and other tuber, fish, meat, oil and fat.
In August 2022, all items inflation rate on a year-on-year basis was highest in Ebonyi (25.33 per cent), Rivers (23.70 per cent), Bayelsa (23.01 per cent), while Jigawa (17.30 per cent), Borno (17.56 per cent) and Zamfara (18.04 per cent) recorded the slowest rise in headline year-on-year inflation.
On a month-on-month basis, however, August 2022 recorded the highest increases in Anambra (2.78 ), Ondo (2.53 per cent), Nasarawa (2.40 per cent), while Yobe (0.68 per cent), Borno (0.84 per cent) and Zamfara (0.98 per cent) recorded the slowest rise on month-on-month inflation.
The increase to 20.52, which further worsens the 17-year high reached in July when inflation hit 19.64 per cent in July, also implies an exacerbation of the cost of living crisis that has seen the price of products and services skyrocket in the past few months.
Economist blames policy
In explaining the possible causes behind the continued increase in inflationary pressure, experts have cited factors such as disruption in the supply of food products, increase in import cost due to the persistent currency depreciation and a general increase in the cost of production as the major drivers.
Speaking exclusively with The PUNCH, an economist, Professor Akpan Ekpo, described the rising inflation as expected, considering Nigeria’s current economic realities.
The academic, who lectures at the University of Uyo, further stated the inordinate spending by the political class to fund their electioneering campaigns had also contributed to fueling the inflationary pressure. This, he said, had led to “too much money chasing too few goods.”
“I’m surprised it’s not higher,” Ekpo said.
“That’s the problem, too much spending by politicians. The Central Bank of Nigeria is still giving the government money because they don’t know how to tell the government ‘no’. So, I don’t see the inflation rate coming down this year.”
Asked if the decision by the Monetary Policy Committee to increase base lending rate had helped curb the increase in inflation, Ekpo said, “What MPC does is to increase the interest rate to curtail growth and investment, but it doesn’t work because our economy is not the U.S economy. Their currency, the dollar, is both a domestic and an international currency. It is convertible.
“In our own case, naira is not convertible. So the exchange rate gap, the gap between the official rate and the black market, is too wide. With the exchange rate regime strengthened by politicians spending money, I don’t see it coming down. The MPC may meet and increase the rate, it won’t change anything. They’ve done it twice, yet, as they do it, inflation keeps accelerating. So, they have to think of putting in place investment policies.” Punch
