More Worries For Consumers As Inflation Rises To 17.33% in February, Highest In 46 Months

metro

4 years ago

More Worries for consumers reeling under low purchasing power, ocassioned by devaluation of the local currency as food prices have continued their upward swing with all items under inflation rate increasing by 0.86 percent to 17.33 percent, against 16.47 percent recorded in January, the nation’s data agency said on Tuesday in its Consumer Price Index (CPI) report for February 2021 released in Abuja.

This is the highest level in 46 months, according to Bismark Rewane, Chief executive, Financial Derivatives Company (FDC), who actually estimated early this month that the country’s headline inflation would increase sharply by 0.80% to 17.27% in February 2021

According to him, inflation is not only moving further away from the upper band of the CBN’s 6-9% target, it is likely to impede output growth as Real GDP growth increased marginally by 0.11% in Q4’20 after two consecutive quarters of negative growth.

According to Rewane in the March 3, Economic Bulletin, in the last two months, there has been a divergence between the direction of month on month and annual inflation due to the base year effects and supply shocks. “The monthly price index is estimated to remain relatively flat at 1.49% (19.47% annualized) in February.

We have also noticed the impact of high-powered money and the massive borrowing of the FGN via the CBN. The effect of the crowding out of private investors from the public debt market by the CBN printing money is now playing out in higher price inflation”.

Specifically, the National Bureau of Statistics (NBS), says the inflation rate increased in February by 0.86 per cent to 17.33 per cent from 16.47 per cent recorded in January.

The bureau added that CPI increased by 17.33 per cent (year-on-year) in February.

CPI measures the average change over time in prices of goods and services consumed by people for day-to-day living.

The report said increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yielded the headline index.

“On month-on-month basis, the headline index increased by 1.54 per cent in February, this is 0.05 per cent rate higher than the rate recorded in January (1.49 per cent),” said the report.

The NBS said the percentage change in the average composite CPI for the 12 months period ending February over the average of the CPI for the previous 12 months period was 14.05 per cent.

This, it said, showed 0.43 per cent point from 13.62 per cent recorded in January.

According to the report, the urban inflation rate increased by 17.92 per cent (year-on-year) in February from 17.03 per cent recorded in January.
It added that the rural inflation rate increased by 16.77 per cent in February from 15.92 per cent in January.

It said on a month-on-month basis, the urban index rose by 1.58 per cent, up by 0.06 rate recorded in, while the rural index also rose by 1.50 per cent in February, up by 0.04 per cent that was recorded in January (1.46) per cent.
“The corresponding 12-month year-on-year average percentage change for the urban index is 14.66 per cent in February.
“This is higher than 14.23 per cent reported in January, while the corresponding rural inflation rate in February is 13.48 per cent compared to 13.04 per cent recorded in January,” the report stated.

It added that the composite food index rose by 21.79 per cent in February compared to 20.57 per cent in January.

It said the rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, food products, fruits, vegetables, fish and oils and fats.
It added that on month-on-month basis, the food sub-index increased by 1.89 per cent in, up by 0.06 per cent points from 1.83 per cent recorded in January.

The bureau said that ”All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce stood at 12.38 per cent in February, up by 0.53 per cent when compared with 11.85 per cent recorded in January.

“On month-on-month basis, the core sub-index increased by 1.21 per cent in February.
“This was down by 0.05 per cent when compared with 1.26 per cent recorded in January.

“The highest increases were recorded in prices of passenger transport by air, medical services, miscellaneous services relating to the dwelling, hospital services and passenger transport by road.

“Others are pharmaceutical products, paramedical services, repair of furniture, vehicle spare parts, maintenance and repair of personal transport equipment, motor cars, dental services and hairdressing salons and personal grooming establishment,” NBS stated.

For state profile, the NBS said in February, all items inflation on year-on-year basis was highest in Kogi (24.73 per cent), Bauchi (22.92 per cent) and Ebonyi (20.45 per cent).

Meanwhile Enugu (14.73 per cent), Kwara (14.25 per cent) and Cross River (12.97 per cent) recorded the slowest rise in headline year-on-year inflation.

On month-on-month basis, however, February all items inflation was highest in Kogi (3.25 per cent), Ondo (2.46 per cent) and Kebbi (2.43 per cent).

However, Kwara at 0.84 per cent, Kano (0.70 per cent) and Oyo (0.38 per cent) recorded the slowest rise in headline month on month.

For food inflation, on a year-on-year basis, it was highest in Kogi (30.47 per cent), Ebonyi (25.73 per cent) and Sokoto (25.68 per cent).

The report said Gombe (19.32 per cent), Bauchi (18.74 per cent) and Akwa Ibom (18.7 per cent) recorded the slowest rise in year on year inflation.
On month-on-month basis, however, food inflation was highest in Kogi (3.34 per cent), Ondo (3.33 per cent) and Ebonyi (3.26 per cent).

It added that Benue and Niger recorded 0.90 per cent, Kano (0.7per cent) and Oyo (0.09 per cent) recorded the slowest rise in month-on-month food inflation.

.Nigeria At Policy Cross Roads

According to the foremost economists, “This is crunch time for Nigerian policy makers as they attempt to make the pricing of financial instruments consistent with the monetary policy framework of inflation targeting.

The CBN has moved reluctantly but expectedly on allowing the exchange rate move at the I & E window to bring about a level of general equilibrium in the markets. But it is still far away from achieving what is considered an efficient formula for maintaining exchange rate flexibility and achieving fiscal neutrality.”