Subsidy removal without adequate preparation and rising food prices ocassioned by the growing insecurity that has prevented farmers from visiting their farms, among others are considered by some analysts as responsible for Nigeria’s June inflation rate increasing to 22.79% for the sixth time in 2023.
This is contained in the released consumer price index report by the National Bureau of Statistics (NBS), on Monday, July 17, 2023.
The development, according to the analysts will put more pressure on the central bank (CBN) to tighten monetary policy rate further when it meets to set interest rates next week.
This will be in line with their predictions that the rate will be further tightened in July as the fiscal policy measures of government seems excercebating liquidity in the system with attendant dwindling purchasing power and even value of the local currency.
Next week’s meeting will be the first since new president Bola Tinubu suspended central bank governor Godwin Emefiele in June after promising a “thorough house cleaning” of monetary policy at his May inauguration.
However, one of Emefiele’s deputies, Folashodun Shonubi, is currently acting central bank governor.
On a year-on-year basis, the Headline inflation rate was 4.19% points higher compared to the rate recorded in June 2022, which was 18.60%. “This shows that the Headline inflation rate (year-on-year basis) increased in June 2023 when compared to the same month in the preceding year (i.e., June 2022),” it said. According to the report, the food inflation rate quickened to 25.25 percent in June from 24.82 percent in May. Food and non-alcoholic beverages (11.81%) led the list of items that contributed to inflation based on the divisional level.
Housing water, electricity, gas, and other fuel followed with 3.81%, while communication at 0.15% was the least on the list. The uptick in the inflation rate was largely driven by the food index, as food inflation accelerated to 25.25% in the review month compared to 24.82% recorded in May 2023. On a month-on-month basis, the Food inflation rate in June 2023 was 2.40%, this was 0.21% points higher compared to the rate recorded in May 2023 (2.19%). The rise in Food inflation on a year-on-year basis was caused by increases in prices of oil and fat, bread and cereals, fish, potatoes, yam and other tubers, fruits, meat, vegetable, milk, cheese, and eggs. ALSO READ:Amid Inflationary Pressures, Tinubu Rolls Out Plan To Pay N8000 Stipend P/M To 12m Households In the same vein, core inflation increased to 20.27% from 20.06% in the prior month. The increase in the core index is on the back of the federal government’s petrol subsidy removal announcement, which saw the price of petrol increase from an average of N185/ltr to N500 per litre. On a month-on-month basis, the core Inflation rate was 1.74% in June 2023. It stood at 1.81% in May 2023, down by 0.07%. The highest increases were recorded in prices of passenger transport by air, gas, vehicle spare parts, liquid fuel, fuels, and lubricants for personal transport equipment, medical services, passenger transport by road, etc.