Nigeria’s inflation rate increased to 18.60 per cent in June, up from 17.71 per cent in the previous month, the National Bureau of Statistics (NBS) said on Friday.The new rate is 0.84 per cent points higher compared to the rate recorded in June 2021, which was 17.75 per cent.

The new rate may be the highest in over five years over surging food and Petroleum products prices.

This is even as analysts insist that data from the statistics agency may not be the true reflection of market reality.

According to Bismarck Rewane, chief executive of the Financial Derivatives Company, should the CPI basket be reconstituted, inflation rate could be much higher with the range over 45 percent.

This will continue to erode consumer’s purchasing power, with the attendant impoverishment.

However, according to the NBS, in the report, “This means that the headline inflation rate increased in the month of June 2022 when compared to the same month in the previous year (i.e., June 2021).“

“Increases were recorded in all COICOP divisions that yielded the Headline index.”

On a month-on-month basis, the headline inflation rate increased to 1.82 per cent in June 2022, which is 0.03 per cent higher than the rate recorded in May 2022 (1.78 per cent).

The NBS said the percentage change in the average composite CPI for the twelve months period ending June 2022 over the average of the CPI for the previous twelve months period is 16.54 per cent, showing a 0.62 per cent increase compared to 15.93 per cent recorded in June 2021.

Rewane had predicted in the current Economic Bulletin that their econometric model and market survey project a spike in inflation of 0.69% to 18.4%, two percent lower than the current rate for the month of June.

 Even at that he said the lower figure predicted would be the highest level in 64 months, coinciding with a surge in inflation in the U.S to 9.1%, a 41- year high and in neighboring Ghana where inflation is at 29.8%, the highest since 2003.
Just like NBS, Rewane believes that the huge leap in inflation could partly be attributed to the knock on effect of the price of diesel which has increased by approximately 278.01% since January 2022.

ALSO READ:CBN Governor Challenges Policy Makers On New Monetary Policy Tools To Improve Innovations, Digital Financing

This is because many institutions depend on diesel to power their generators as well as trucks used to transport food items.

 “Apart from the power costs, most traders and manufacturers have been sweltering under the impact of dollar scarcity and a depreciating exchange rate. The combined effect of power costs, exchange rate depreciation and money supply saturation is manifesting in a spiraling inflationary cycle,“ he said.
He was however quick to observe that high inflation is not a Nigeria specific phenomenon and is now a threat to global macro-economic stability.

Most central banks in advanced, and emerging markets and developing economies (EMDEs)are adopting aggressive monetary policy tightening strategy to confront the hydra–headed inflation problem.