Food index at highest since 2008
Nigerians’ disposable incomes took a hit last month as the consumer price index (CPI), which measures inflation, increased by 16.47 per cent (year-on-year) in January. Also, escalating food inflation has remained unabated.
Though analysts at Cordros Securities noted that the month-on-month moderation in food prices may have been largely driven by the dissipating impact of festive-induced demand that increased the pressure on food demand, stakeholders said there is the need to address structural-induced factors limiting price stabilisation efforts of the monetary authority.
According to the latest CPI report, released by the National Bureau of Statistics (NBS) yesterday, Nigeria’s headline inflation increased to its highest in over three years while food inflation rose to its highest since July 2008, when it stood at 20.9 per cent.
On a month-on-month basis, the headline index increased by 1.49 per cent in January 2021. This is 0.12 per cent points lower than the rate recorded in December 2020 (1.61/ per cent).
The food index rose sharply to a record high to stand at 20.57 per cent in January 2021 compared to 19.56 per cent recorded in the previous month.
On a month-on-month basis, the food sub-index increased by 1.83 per cent in January 2021, down by 0.22 per cent points from 2.05 per cent recorded in December 2020.
The rise in the food index was attributed to increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetables, fish as well as oil and fat.
The organised private sector (OPS) identified structural factors, which constrain productivity across sectors to include decline in agricultural output, exchange rate depreciation, higher energy costs, security concerns in key food-producing states, covid-19 disruptions, flooding, climate change issues and high transportation costs as major inflation drivers that need to be checked.
According to the LCCI, headline inflation will remain elevated as the combination of food supply shocks, FX policies, higher energy cost, foreign exchange (FX) illiquidity and heightened insecurity in major food-producing states continue to mount pressure on domestic prices.
“We believe a broad-based harmonisation of fiscal and monetary policies towards addressing the identified structural constraints will significantly help to moderate inflationary pressure in the medium term”, the chamber’s Director-General, Dr. Muda Yusuf added.
The “all-item less farm produce or core inflation, which excludes the prices of volatile agricultural produce stood at 11.85 per cent, up by 0.48 per cent when compared with 11.37 per cent recorded in December 2020.
On a month-on-month basis, the core sub-index increased by 1.26 per cent in January 2021. This was up by 0.16 per cent when compared with 1.1 per cent recorded in December 2020.
The highest increases were recorded in prices of air transport, medical services, hospital services, road passenger transport, pharmaceutical products and paramedical services.
Others include repair of furniture, vehicle spare parts, motor cars, miscellaneous services relating to the dwelling, maintenance and repair of personal transport equipment.
Kogi States led the list of states with the highest inflation rate in January 2021 with 21.38 per cent. It was closely followed by Oyo State with 20.17 per cent, Bauchi (19.52 per cent), Ebonyi (18.74 per cent) and Benue State (18.33 per cent).
On the other hand, Cross River recorded the lowest at 12.22 per cent followed by Abuja (12.94 per cent), Kwara (13.96 per cent), Abia (14.03 per cent) and Enugu (14.26 per cent).
In terms of food inflation, Kogi State also recorded the highest at 26.64 per cent, followed by Oyo State (23.69 per cent).