John Omachonu
The National Bureau of Statistics will publish its Consumer Price Index (CPI) report for the month of May next week.
But news coming from some analysts are not cheering at all, as consumers, reeling under the burden of rising consumer price index (CPI) should expect higher prices with the attendant impoverishment.
According to Bismarck Rewane, chief executive of Financial Derivatives Company in the current FDC Economic Bulletin:
“Our econometric model and market survey suggests a 0.9% increase in headline inflation to 17.72% in May.
This will be the 4thconsecutive monthly increase and the highest inflation rate in almost 12 months.“
Rewane further said that a noticeable trend during the survey is that “commodity prices are increasing at a faster pace for food items than in the non-food basket, reflecting the combined effects of seasonality, output shocks and war-induced global supply chain disruptions.“
Flour and diesel are major costs components in the baking of bread, accounting for 70% and 15% of the total costs.
Specifically, the price of flour and diesel spiked by 76.7% and 209.37% to N26,500/bag and N750/litre respectively in the last year.
Metrobusinessnews investigations show that the development has pushed upwards the price of a loaf of bread from N700 two months ago to between N900 and N950.
More worrisome is the fact that inspite of the price surge, wages have remained static or even declined in real terms as some governors have continued with percentage salary and pension payments to workers and pensioners, particularly at the local government level.
Some other analysts expect increasing price resistance of consumers and possible switch over to substitutes where available.
They further contend that there are indications that the price spiral is not likely to be short-lived since price inflation is not a Nigeria specific phenomenon,
According to financial consultant, who pleaded for anonymity, “CBN has completely lost the battle as far as inflation targeting is concerned as its target of between 6-9 percent has never been achieved for a very long time.
Most global central banks have reluctantly accepted that this bout of inflation is no longer transitory but structural, hence, the recent increases in policy rates across countries.
Nigeria has also followed with its own interest rate hike recently.
Rewane says that since it is widely believed that an interest rate hike is not sufficient in tackling cost push inflation, there will be need for other complementary policy initiatives.
For instance, recent experience in Ghana where inflation rose by 400bpts to 27.6 percent in spite of the 200bpts hike in interest rate is a sad reminder that anything can happen anytime, in spite of some obvious efforts.
