Petrol Prices Surge 216%, Diesel Rates Ease Marginally as Inflation Bites Harder

Emmanuel Addeh in Abuja

There appears to be no immediate respite for Nigerians on the current soaring inflation induced partly by energy and transportation costs, as prices of Premium Motor Spirit (PMS) also called petrol, rose to a high of 216 per cent Year-on-Year (YoY) in July.

According to the latest data from the National Bureau of Statistics (NBS), the average retail price paid by consumers for petrol for the month under consideration was N600.35, indicating an actual 215.95 per cent increase when compared to the value recorded in July 2022, which was N190.01.

The continuing rise in the cost of petrol and diesel has led to Nigeria’s transport fares doubling in across the country, thereby putting upward pressure on inflation, which is currently at a multi-decade high.

Likewise, the NBS data showed that in comparing the average price value with the previous month of June 2023, the retail price increased by 9.99 per cent from N545.83.

Last week, the federal government announced that inflation rate in Nigeria had hit 24.08 per cent in July 2023, showing a 129 basis-point increase when compared to 22.79 percent recorded in the previous month.

The rise in inflation rate for July represented the sixth consecutive increase in the headline index this year and is mostly attributable to the wholesale withdrawal of petrol subsidy and the unification of the official exchange rate.

Nigeria’s case is further worsened because the country does not refine its fuels locally, leaving the rates to the vagaries of the international market for the product.

A former President of the Manufacturers Association of Nigeria (MAN) and Director, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, recently called for urgent government intervention to curb surging inflation by partly ensuring domestic refining of petroleum products.

Yusuf listed some of the factors pushing up inflation to include: depreciating exchange rate, spike in energy prices, rising transportation costs, logistics challenges, forex market illiquidity, hike in diesel cost, insecurity in many farming communities and structural bottlenecks impeding productivity.

However, he added that: “The petrol price increase following the fuel subsidy removal and the sharp depreciation in the exchange rate were dominant factors.”

Salary earners have also been badly hit as real wages, which reflect the power of employees’ pay after accounting for inflation, have fallen in Nigeria by over 150 per cent.

Partner and Chief Economist at KPMG Nigeria, Dr Yemi Kale, also recently said the net benefits of the subsidy removal were positive, but noted that there would be disruptions arising from a direct increase in energy prices, inflation rate, and transportation fares.

 “This disruption has an indirect impact on the increase in food prices and consumer demand. This is so because their purchasing power is weakened; consumer demand also shrinks unless the government provides some kind of relief to cushion the effect,” he said.

The NBS in its state profile analysis stated that Borno State had the highest average retail price for PMS during the period under consideration, at N657.27.

In addition, Abia and Gombe States were next, with N643.13 and N642.22, respectively.

On the other hand, Edo, Kwara and Benue states had the lowest average retail prices for petrol, at N530.00, N535.44 and N537.00, respectively.

Lastly, on zonal profile, the North-east zone had the highest average retail price of N630.13, while the North-central Zone had the lowest price of N551.58 in July.

However, in July the price of diesel which had been deregulated before now, slowed marginally month-on-month, even though it rose year-on-year.

The average retail price of diesel also called Automotive Gas Oil (AGO) paid by consumers increased by 2.60 per cent on a year-on-year basis from a lower cost of N774.38 per litre recorded in the corresponding month last year, to a higher cost of N794.48 per litre in July 2023.

“On a month-on-month basis, a decrease of 2.62 per cent was recorded from N815.83 in the preceding month of June to an average of N794.48 in July 2023.

“Looking at the variations in the state prices, the top three states with the highest average price of the product in July 2023 included Niger state (N892.50), Abia state (N890.63) and Enugu state (N872.73),” the NBS report said.

Furthermore, it explained that the top three lowest prices were recorded in the following states namely: Bayelsa state (N683.20), Anambra/Bauchi state (N700.00) and Ondo state (N701.58).

The zonal representation of average price of diesel, NBS said, showed that the North-central zone had the highest price of N863.10 while South-west zone had the lowest price N759.45 when compared with other zones.