Logistics challenges ocassioned by the lockdown and decay infrastructure, new electricity tariffs scheduled for August and the likelihood of another forex adjustment as the economy re-opens this quarter are potential factors that could sustain the rising inflation, Analysts say.
In line with analysts forecast, Nigeria’s headline inflation increased for the 10 th consecutive month to 12.56% in June.
Also, petrol price which is back up to N145/litre and disruptive economic activities ocassioned by the socio-political uncertainty in the polity will further push costs upward and could lead to higher prices.
Already aggregate demand is slowing due to the fall in consumer disposable income and spending patterns which are tilted in favour of lower priced commodities.
According to Bismarck Rewane, chief executive of Financial Derivatives Company and his group of analysts in the current Economic Bulletin, “We expect this to taper inflationary pressures. Notwithstanding, the cost-push factors seem to outweigh the demand pull factors, thus suggesting that inflation could be fast approaching an inflection point. This will be a major consideration at the MPC meeting on Monday.”
” Is this the beginning of galloping inflation or a trend of moderation? This is the question facing policy makers, consumers and markets.”
The analysts believe that the monthly inflation is more reflective of current conditions than headline inflation, adding that the slowing pace of inflation is partly due to the shrinking of consumer disposable income in an economy dominated by the informal sector. This, according to them has resulted to lower productivity for residents, a development that could push the inflation rate even higher than the current level of 12.56%.
This is 0.16% higher than 12.40% recorded in the month of May. More disturbing is the fact that the rate of change in the year-on-year inflation is increasing at a faster pace.
Most traders and casual workers have seen their incomes evaporate due to the lockdown and closure of borders.
“I foresee more challenges for the average Nigerians who are impoverished on daily basis due to the skewness of money at the disposal of Nigerians in favour of politicians and political office holders, ” says Friday Ameh, Lagos based analyst.
Specifically, the rising prices of stable food items such as Bread and Cereals, Potatoes, Yam and other tubers, Fruits, Oils and Fats, Meat, Fish and Vegetables, ocassioned by soaring rise in the food index is responsible for the benign inflation, says, National Bureau of Statistics, (NBS).
The development, according to analysts portends danger for the low income and middle level Nigerians whose purchasing power has been eroded by the current economic hardship.
This will be the 10 th consecutive monthly increase and the highest rate since 2018, a development analyst say portends harder times await consumers.
NBS in it’s latest Consumers Price Index (CPI) furtherv disclosed that thr composite food index stood at 15.18%, 0.14% points higher compared to 15.04% recorded in May 2020. Also, On month-on-month basis, the food sub-index increased by 1.48% in June 2020, up by 0.06% points from 1.42% recorded in May 2020.
NBS in it’s latest Consumers Price Index (CPI) furtherv disclosed that thr composite food index stood at 15.18%, 0.14% points higher compared to 15.04% recorded in May 2020. Also, On month-on-month basis, the food sub-index increased by 1.48% in June 2020, up by 0.06% points from 1.42% recorded in May 2020.
Similarly, the ”All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural
produce stood at 10.13% in June 2020, up by 0.01% when compared with 10.12% recorded in May 2020.
On month-on-month basis, the core sub-index increased by 0.86% in June 2020. This was down by 0.02% when compared with 0.88% increase recorded in May 2020.
According to the nation’s statistics body, the highest increases were recorded in prices of Medical services, Hospital services, Passenger transport by road, Pharmaceutical products, Motor cars, Paramedical Services, Maintenance and repair of personal transport equipment, Bicycles, Motor cycles, Vehicle spare parts and Other services in respect of personal transport equipment.
produce stood at 10.13% in June 2020, up by 0.01% when compared with 10.12% recorded in May 2020.
On month-on-month basis, the core sub-index increased by 0.86% in June 2020. This was down by 0.02% when compared with 0.88% increase recorded in May 2020.
According to the nation’s statistics body, the highest increases were recorded in prices of Medical services, Hospital services, Passenger transport by road, Pharmaceutical products, Motor cars, Paramedical Services, Maintenance and repair of personal transport equipment, Bicycles, Motor cycles, Vehicle spare parts and Other services in respect of personal transport equipment.
However the June 2020 report shows all items inflation on year on year basis was highest in Bauchi (15.02%) followed by Sokoto state (14.88% rate), Ebonyi (14.6%) others include Plateau (14.49%) and Taraba state (13.95%).
