Increasing food prices heighten inflation to 15.75 percent in Nigeria ─NBS

*Food inflation rose by 19.56 percent in December 2020 compared to 18.30 percent last November, and the increase in the index was tied to rise in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats, says National Bureau of Statistics

*Headline inflation is a hydra-headed monster that has eroded the disposable and discretionary income of consumers ─FDC Analysts

Alexander Davis | ConsumerConnect

Following an increase in the Food Index usually associated with the rise in the prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, other foodstuffs and daily needs, the Consumer Price Index (CPI), which measures inflation, increased by 15.75 percent (year-on-year) in December 2020 compared to 14.48 percent in November of the same year in Nigeria.

The National Bureau of Statistics (NBS) in its figures released Friday, January 15 stated based on the CPI figures for December, on month-on-month basis, the headline index increased by 1.61 percent.

The NBS said the food inflation rose by 19.56 percent in December 2020 compared to 18.30 percent last November.

The increase in the food index was tied to the rise in the prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.

A foodstuffs market in Nigeria

Likewise, core inflation, which excludes the prices of volatile agricultural produce stood at 11.37 percent in December, up by 0.32 percent when compared with 11.05 percent recorded in November.

The core index recorded highest increases in prices of passenger transport by air, medical services, hospital services, shoes and other footwear, passenger transport by road, miscellaneous services relating to the dwelling, and hairdressing salons and personal grooming establishments.

Others are repair of furniture, vehicle spare parts, pharmaceutical products, motor cars, maintenance and repair of personal transport equipment, paramedical services, motor cycle, dental services and bicycles, said the statistical agency.

It also noted that the urban inflation rate increased by 16.33 percent (year-on-year) in the review period from 15.47 percent recorded in the preceding month while the rural inflation rate increased by 15.20 percent in December from 14.33 percent in November.

According to the NBS, in the period under review, Edo, Kogi and Sokoto States recorded the highest year-on-year increase in food inflation with 24.14 percent, 23.14 percent and 22.24 percent respectively.

Bauchi, Abia, and Nasarawa recorded the slowest rise with 16.53 per cent, 16.04 per cent and 15.71 percent respectively.

The agency as well stated that on month-on-month basis however, the December food inflation was highest in Edo 3.68 percent, Benin 3.48 percent and Gombe 3.00 percent, while River 0.93 percent, Osun 0.59 percent and Ekiti 0.24 percent recorded the slowest rise.

Similarly, year on year, in December, core inflation on was highest in Bauchi 19.85 percent, Edo 18.15 percent and Kogi 18.40 percent, while Lagos 14.05 percent, Kwara 13.91 percent and Abia 13.30 percent recorded the slowest rise in headline inflation.

On month-on-month basis however, it added that December all-item inflation was highest in Nasarawa 2.30 percent, Gombe 2.20 percent and Akwa Ibom 2.16 percent while Ekiti 0.87 percent, Rivers 0.67 percent and Ebonyi 0.61 percent recorded the slowest rise in headline inflation.

It is recalled that analysts at the Financial Derivatives Company (FDC) Limited, led by foremost economist, Mr. Bismarck Rewane, recently predicted that headline inflation would increase by 0.51 percent to 15.4 percent in December.

The company described it as “a hydra-headed monster that has eroded the disposable and discretionary income of consumers.”

“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs.”

According to the analysts, consumers’ disposable income had been negatively affected by the hike in electricity tariffs, general reductions in subsidies, and improved tax mobilisation.

Cordros Capital Limited was also quoted to have said: “We believe the sustained pressure in the food basket is reflective of the impact of the underwhelming harvest season, persistent security challenges in the food-producing region and festive-induced demand which further widened the demand-supply imbalance.”