Higher Energy, Food, Commodity Prices Drive Inflation to 26.72%

•Severe in Kogi, Rivers, Lagos, others 

•Rewane says bad roads contributing to higher food prices

James Emejo in Abuja

The Consumer Price Index (CPI) which measures  change in prices of goods and commodities increased to 26.72 per cent in September, compared to 25.80 per cent in the preceding month, the National Bureau of Statistics (NBS) disclosed yesterday.

Year-on-year, food inflation rose to 30.64 per cent, or 7.30 per cent rise compared to 23.34 per cent in September 2022.

Core inflation, which excludes the prices of volatile agricultural produce and energy, stood at 21.84 per cent year on year, up by 4.35 per cent when compared to the 17.49 per cent recorded in September 2022.

According to the CPI Report for  September, which was released by the statistical agency, the rise in the food Index, year-on-year was attributed to increases in the prices of oil and fat, bread and cereals, potatoes, yam and other tubers, fish, fruit, meat, vegetables and milk, cheese, and eggs.

However, month on month, food inflation dropped to 2.45per cent in September which was  1.41 per cent lower than the 3.87 per cent recorded in August.

The decline was attributed to a fall in the rate of increase in the average prices of potatoes, yam and other tubers, bread and cereals, fruits, and fish.

Similarly, the increase in core inflation was adduced to the highest increases recorded in prices of passenger transport by road, passenger transport by air, medical services, repair of furniture, maintenance, and repair of personal transport equipment, among others.

Month-on-month, the core index rose to 2.22 per cent during the review period compared to 2.18 per cent in August.

Also, year-on-year, urban inflation increased to 28.68per cent, which was 7.43 per cent higher compared to 21.25 per cent in September 2022.

On a month-on-month basis, the urban rate dropped to 2.24 per cent compared to 3.29 per cent in August.

Similarly, rural inflation soured to 24.94 per cent year-on-year  compared to the 20.32 per cent in September 2022 while on a month-on-month basis, the index declined to 1.96 per cent from 3.08 per cent in August.

At the state levels, the all Items inflation year-on-year,  was highest in Kogi (32.95 per cent), Rivers (30.63 per cent), and Lagos (30.04 per cent), while Borno (21.05 per cent ), Jigawa (22.39 per cent) and Benue (23.22 per cent) recorded the slowest rise in headline inflation in the review period.

Month-on-month,  however, the highest price increases was recorded in Taraba (3.39 per cent), Bauchi (3.38 per cent), and Niger (3.28 per cent), while Borno (0.71 per cent ), Ekiti (1.05 per cent) and Benue (1.13 per cent ) recorded the slowest rise on month-on-month inflation.

Also, year on year, food was highest in Kogi (39.37 per cent), Rivers (35.95 per cent), and Lagos (35.66 per cent), while Jigawa (23.41 per cent ), Borno (25.29 per cent) and Sokoto (25.38 per cent) recorded the slowest rise in the food index.

Similarly, month-on-month, food inflation was highest in Akwa Ibom  (4.23 per cent), Niger (4.19 per cent ), and Ebonyi (3.74 per cent), while Cross River (0.31 per cent), Borno (0.62 per cent) and Bayelsa (0.73 per cent) recorded the slowest rise in food inflation in the period under review.

Reacting to the rising inflation, Chief Executive, Financial Derivatives Company Limited, Mr. Bismarck Rewane,  attributed the rising inflation, especially the food component in Nigeria to largely logistical constraints particularly bad roads and the high cost of diesel for transportation.

Speaking on Arise Television, he said, “Let’s go back to basic definitions. Inflation is the situation where too much money is chasing too few goods.

“Fundamentally, if you have an output growth which is GDP growth of about 2.5 per cent and you have money supply growth of about 34 per cent, 35 per cent, automatically ab initio, you have 31 per cent inflation factor to start with before you introduce other factors.

“So, what we are seeing today is quite interesting in the sense that every church now is having a harvest and there is a yam festival in Onitsha and all that.”

Rewane added, “At this time of the year, typically, you find that the price of food actually declines. But look at it, food inflation is at 30.64 per cent and that’s the highest-level food inflation has been in ages.

“There’s an argument of what constitutes a food basket in Nigeria but the reality is that we are facing a situation where international food prices are declining while domestic food prices in Nigeria are increasing.

“The reason this is happening is because of certain logistical bottlenecks including the price of diesel which is used to transport goods but the most important debilitating factor is the state of the roads.”

However, Wealth Management and Business Development Consultant, Mr. Ibrahim Shelleng, told THISDAY that the rise in inflation could be largely attributed to the depreciation of the naira.

He said, “This has affected all aspects of the economy due to the import-dependent nature of the Nigerian economy. Petrol prices and food prices have all skyrocketed.”

Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, said, “It is really unfortunate that while other countries of the world that experienced increased inflation rate due to the impact of Ukrainian/ Russian war are beginning to revive, Nigeria is still having continuous increase in their inflation rate.

“The triggers of our high inflation rate are still here with us. High exchange rate, high petroleum products prices, insecurity, etc. We need to deal with these triggers so that we can experience a reprieve.”

On his part, Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the factors affecting inflationary trends were still subsisting, adding that the new management team of the CBN were just shaping their policy direction.

According to him, “The government revenue is still low, the federal government still has a budget deficit that needs a $1.5 billion World Bank loan to bridge,  the naira is still experiencing a free fall.

“The federal government needs to implement its policies quickly from both monetary and fiscal side and create confidence in the economy.

“The government needs to increase revenue urgently and negotiate loan repayment. We need to increase the foreign reserves significantly in order to stabilise the Naira. 

“The policies of the government can stem inflation on the long run but in the immediate critical measures needs to be put in place to safe the economy and reduce suffering of the people.”

Also reacting to the latest inflation figure, the Chairman, Chartered Institute of Bankers of Nigeria (CIBN), Abuja Branch, Prof. Uche Uwaleke, told THISDAY that whereas inflationary pressure was slowing in many parts of the world including the US, UK, EuroArea, South Africa and even Ghana (where inflation rate is now about 40 per cent), the index had continued to maintain an upward trajectory in Nigeria.

This, he said, reflected the impact of the fuel subsidy removal and naira depreciation, stressing that the pressure point was on the food index which contributed about 14 per cent of the headline index.

Uwaleke added, “This pressure is felt more in the urban than in rural areas possibly on account of high transport costs.

“The trend in the inflation rate is quite worrisome given its impact on the purchasing power of the naira and by extension on poverty level.

“It is equally partly to blame for the increasing dollarisation of the Nigerian economy and the demand pressure in the forex market.”