Nigeria’s Inflation Nears Two-Decade Record High At 20.52% As Food Prices Soar

The development may have confirmed some analysts’ predictions that prices of food items would still continue its upward strings.

The National Bureau of Statistics (NBS) said this in its consumer price index (CPI) report for August 2022, released on Thursday.

According to NBS, the rate was 3.52 percent higher than the 17.01 percent recorded in August 2021.

According to the report, increases were recorded in all classifications of individual consumption according to purpose (COICOP) divisions that yielded the headline index.

“On a month-on-month basis, the headline inflation rate in August 2022 was 1.77 percent, this was 0.05 percent lower than the rate recorded in July 2022 (1.82 percent).

This means that in August 2022 the headline inflation rate (month–on–month basis) declined by 0.05 percent,” the report reads.

“The percentage change in the average CPI for the twelve months period ending August 2022 over the average of the CPI for the previous twelve months period was 17.07 percent, showing a 0.47 percent increase compared to 16.60 percent recorded in August 2021.”

The report added that food inflation rose to 23.12 percent in August 2022 on a year-on-year basis, representing a 2.82 percent increase when compared to 20.30 percent in August 2021.

“This rise in the food inflation was caused by increases in prices of bread and cereals, food products like potatoes, yam and other tubers, fish, meat, oil and fat,” it added.

“On a month-on-month basis, the food inflation rate in August was 1.98 percent, this was a 0.07 percent decline compared to the rate recorded in July 2022 (2.04 percent).

“This decline is attributed to the reduction in prices of some food items like tubers, garri, local rice and vegetables.

“The average annual rate of food inflation for the twelve-month period ending August 2022 over the previous twelve-month average was 19.02 percent, which was a 1.48 percent decline from the average annual rate of change recorded in August 2021 (20.50 percent).”

The report further analysed price movements for states, Anambra and Ondo were the highest.

“In August 2022, food inflation on a year-on-year basis was highest in Kwara (30.80 percent), Ebonyi (28.06 percent) and Rivers (27.64 percent), while Jigawa (17.77 percent), Zamfara (18.79 percent) and Oyo (19.80 percent) recorded the slowest rise on year-on-year food inflation.

“On a month-on-month basis, however, August 2022 food inflation was highest in Anambra (3.05 percent), Ondo (2.92 percent) and Bauchi (2.78 percent), while Yobe (0.46 percent), Oyo (0.89 percent) and Delta (0.94 percent) recorded the slowest rise on month-on-month inflation.”

According to Bismarck Rewane, chief executive of the Financial Derivatives Company, in the Economic Bulletin for September, “based on our Lagos market survey and econometric model, there is an indication that headline inflation will increase by 0.76% to 20.4%.

 If our projections are accurate, this will be the seventh consecutive monthly increase and the highest rate of inflation since 2006.

Month-on-month inflation is also expected to move in tandem with the annual rate but it will slow by 0.16% (21.73% annualized).

 In Nigeria, inflation is fueled by several factors but the paramount factors are exchange rate pressure and price of diesel.“

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The economist further said that data shows global food prices are declining, due to the recent Russian-Ukraine grain exports agreement.

But in “ Nigeria and SSA, weaker domestic currencies have blunted the benefits of the global price food decline.

The naira has depreciated by over 20% year-to-date (N705/$). Even though, Global Food commodities have dropped by 1.92% in August, domestic food inflation still remained above 20% in July.

 In spite of a rise in inflation, the MPC is not likely to increase rates at their next meeting this month.“