Impact of Fuel Subsidy Removal, Higher Food Prices Push Inflation to 27.33%

•Severe in Kogi, Lagos, Kwara, others 

•CBN upbeat on price stability

James Emejo in Abuja

The Consumer Price Index (CPI) which measures the rate of change in the prices of goods and services increased by 0.61 per cent to 27.33 per cent in October compared to 26.72 per cent in the preceding month, the National Bureau of Statistics (NBS) stated yesterday.

However, reacting to the latest NBS figures, the spokesman of the Central Bank of Nigeria (CBN), Dr. Isa AbdulMumin, expressed optimism that the rate for October compared to September 2023, was a pointer to the fact that the Bank’s monetary policy stance to tighten rates and its money market reforms were yielding the desired effect.

The NBS report also showed that year-on-year, the headline inflation was 6.24 per cent higher compared to 21.09 per cent recorded in October 2022.

According to the CPI report for October which was released by the statistical agency, year on year, food inflation rose by 7.80 per cent 31.52 per cent   23.72 per cent in the corresponding period 2022.

The NBS attributed the rise in annual food inflation to increases in prices of bread and cereals, oil and fat, potatoes, yam and other tubers, fish, fruit, meat, vegetables and milk, cheese and eggs.

Nonetheless, food inflation month-on-month fell by 1.91 per cent, representing

0.54 per cent drop compared to 2.45 per cent in September.

On the hand, core inflation, year-on-year increased by 5.12 per cent to 22.58 per cent in the review period compared to 17.46 per cent recorded in October 2022.

The rise in the core index was blamed on highest increases in prices of passenger transport by road, medical services, passenger transport by air, actual and imputed rentals for housing, pharmaceutical

products among others.

However, month-on-month, the core index witnessed a decline of 0.83 per cent to 1.39 per cent compared 2.22 per cent to September.

Year-on-year basis, in October urban inflation increased to 29.29 per cent, higher than the 21.63 per cent recorded in October 2022.

On a month-on-month basis, the urban index was 1.81 per cent compared to 2.24 per cent in September.

Similarly, rural inflation year on year stood at 25.58 per cent year on year; indicating an.increase of 5.01 per cent compared to the 20.57 per cent  in October 2022.

On a month-on-month basis, the rural inflation index declined to 1.67 per cent compared to 1.96 per cent in September.

At states level, general inflation year-on-year was highest in Kogi (34.20 per cent), Rivers (31.44 per cent), and Lagos (31.23 per cent), while Borno (20.06 per cent), Jigawa (23.52 per cent) and So- koto (24.47 per cent) recorded the slowest rise.

Month-on-Month, however, headline inflation was highest in Yobe (3.72 per cent), Jigawa (2.85 per cent), Sokoto (2.84 per cent), while Kogi (1.01 per cent), Edo (1.05 per cent) and Kwara (1.18 per cent) recorded the slowest increase.

Also, year-on-year, food inflation was highest in Kogi (41.74 per cent), Kwara (38.48 per cent) and Lagos (37.37 per cent) while Borno (24.41 per cent), Kebbi (24.90 per cent) and Jigawa (25.10 per cent) recorded the slowest rise.

Month- on-Month, however, food inflation was highest in Yobe (5.35 per cent), Sokoto (3.68 pet cent) and Jigawa (3.45 pet cent), while Edo (0.95 per cent), Katsina (1.03 per cent) and Rivers (1.10 per cent) recorded the slowest rise.

Meanwhile,  AbdulMumin, expressed optimism that the low rate of increase in the average price level in October compared to September 2023, was a pointer to the fact that the Bank’s monetary policy stance to tighten rates and its money market reforms were yielding the desired effect. Aggressive monetary tightening using various liquidity mechanisms including removing the cap on the Standing Deposit Facility (SDF) and Open Market Operations had raised Open Buy Back (OBB) rates from less than 1% in August to their expected levels around the monetary policy rate today

In spite of 0.61 per cent increase in the headline inflation rate from 26.72 per cent in September 2023, to 27.33 per cent in October 2023, Isa remained upbeat that the CBN was headed in the desired direction in terms of achieving price stability.

According to him, available statistics showed that the first indication of deceleration in prices was recorded in September and further reforms in the money market, which commenced in October, had accelerated easing in prices as indicated by the substantial drop in month-on-month changes recorded in October.

“Moderation in month-on-month changes in prices observed in the headline, food and core components of the consumer basket followed reforms in the money market and relative stability in the forex market,” he added.