After Momentary Relief, Inflation Hits 32.70% Amid Higher Food, Energy Prices

•CPPE: Situation exacerbated by surging petrol price, calls for urgent government intervention

James Emejo in Abuja

Following two consecutive months of marginal decline, the Consumer Price Index (CPI) which measures the rate of change in prices of goods and commodities shot up to 32.70 per cent in September compared to 32.15 per cent in the preceding month, the National Bureau of Statistics (NBS) revealed yesterday.

The Consumer Price Index (CPI) which measures the rate of change in prices of goods and commodities.

Inflation had eased to 33.40 per cent in July compared to 34.19 per cent in June.

It further declined to 32.15 per cent in August compared to 33.40 per cent.

However, according to the CPI figures for September 2024, year-on-year, headline inflation rose 5.98 per cent compared to 26.72 per cent compared to September 2023.

The continued inflationary pressure dashes hopes of a potential reduction in the Monetary Policy Rate (MPR), the benchmark interest rate that determines the cost of funds in the economy.

The increase in inflation was attributed to the rise in the average price of some items in the basket of goods and services at the divisional level compared to what these items recorded in August 2024, the NBS stated.

Month-on-month inflation stood at 2.52 per cent from 2.22 per cent in August.

Also, food inflation rate increased to  37.77 per cent year-on-year, compared with 30.64 per cent in September 2023.

On annualised basis, the rise in the food index was attributed to increases in prices of guinea corn, rice, maize grains, beans, etc (bread and cereals class), yam, water yam, cassava tuber, etc (potatoes, yam & other tubers class), beer, and tobacco class.

Others were lipton, milo, bournvita, etc (coffee, tea & cocoa class) and vegetable oil, palm oil (oil & fats class) among others.

Month-on-month, food inflation increased to 2.64 per cent compared to 2.37 per cent in August.

Core inflation, which excludes the prices of volatile agricultural produce and energy increased to 27.43 per cent year on year in September compared to 21.84 per cent in September 2023.

The rise in the core index was attributed to the highest increases in prices of rents (actual and imputed rentals for housing, bus journey intercity, journey by motorcycle, and accommodation service, laboratory service, x-ray photography, consultation fee of a medical doctor, among others.

On a month-on-month basis, Core Inflation stood at 2.10 per cent compared to 2.27 per cent  in August.

Year on year, urban inflation inflation increased to 35.13 per cent compared to the 28.68 per cent in September 2023. Month-on-month, the index increased to 2.67 per cent in from 2.39 per cent in August.

Likewise, rural inflation rate in the review month rose to 30.49 per cent,  year-on-year from 24.94 per cent, while month-on-month, the index increased to 2.39 per cent.

At states level, year-on-year, the all-item index was highest in Bauchi (44.83 per cent), Sokoto (38.74 per cent) and Jigawa (38.39 per cent), while Delta (26.35 per cent), Benue (26.90 per cent) and Katsina (27.71 per cent) recorded the slowest rise.

Month-on-month inflation was highest in Sokoto (4.63 per cent), Taraba (4.07 per cent), Anambra (3.74 per cent), while Kwara (1.14 per cent), Cross River (1.78 per cent) and Lagos (1.82 per cent) recorded the slowest increase.

Also, the food index, year-on-year, recorded highest increases in Sokoto (50.47 per cent), Gombe (44.09 per cent), and Yobe (43.51 per cent) while Kwara (32.45 per cent), Rivers (32.80 per cent) and Kogi (32.83 per cent) recorded the slowest rise.

Month-on-month, food inflation was highest in Sokoto (5.94 per cent), Taraba (5.76 per cent), and Bayelsa (4.44 per cent), while Kwara (0.88 per cent), Cross River (1.29 per cent) and Kogi (1.45 per cent) recorded the slowest movement.

Commenting on the latest inflation figures, the Director/CEO, Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, stressed that, “it is troubling that we are witnessing a resurgence of high inflationary pressures after some few months of respite despite policy measures to tame inflation, especially on the monetary side.”

Yusuf further noted in a statement that, “purchasing power had continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.”

He added: “After a few months of deceleration, the inflation numbers had returned to a spiraling path. Headline inflation rose to 32.7 percent in September 2024 as against 32.15 per cent in August 2024, an increase of 0.55 per cent.

“The reality is that the dynamics driving inflation are yet to be effectively subdued. These factors include the depreciating exchange rate, surging fuel price, rising transportation costs,  logistics and supply chain challenges, high energy cost,  climate change including resultant incidents of flooding,  insecurity in farming communities and structural bottlenecks to production.

“These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weaken profitability, and dampen investors’ confidence.

“Not many investors can transfer cost increases to their consumers.  The implication is that manufacturers and other investors are taking a big hit resulting from erosion of profit margins as a result of consumer resistance and weak purchasing power.

“Tackling inflation requires urgent government intervention to address the challenges inhibiting production, productivity and security in the economy. The real sector of the economy needs to be incentivised to reduce production costs.

“The government needs to offer concessionary import duty on intermediate products for industrialists. The effects of high energy cost and exchange rate on inflation is quite significant.

“It will be very difficult to tame inflation if we do not substantially fix power, logistics and forex and security issues.  Regrettably, there are no quick fixes in these areas.  But it is important to prioritise these issues and drive accelerated progress with the right strategies.

“Hopefully, the proposed economic stabilisation measures embodied in a bill currently before the national assembly would substantially address these concerns from the fiscal side.

“Meanwhile, the sub-nationals have critical roles to play in mitigating the challenge of food insecurity and food inflation.

“They are closer to the stakeholders in the agricultural and food value chain and better placed to impact agricultural productivity. The provision of rural roads by the states is also very critical to reduce transportation costs and ease access to markets.”