Inflation defies border reopening order, peaks at 15.75% YoY
Inflationary pressure on cost of items in Nigeria has raged on unabated in December as headline inflation peaked at 15.75 per cent year-on-year in the month, setting highest record in 32 months.
The National Bureau of Statistics (NBS) disclosed in its just released consumer price index (CPI) report for December that inflation spiked by 0.86 percentage points in December, compared with November 2020 record of 14.89 per cent.
According to the report, increases were recorded in all Classification of Individual Consumption According to Purpose (COICOP) divisions that yielded the Headline index.
Meanwhile, analysts in some quarters had forecast a decline in December inflation following an order by President Muhammadu Buhari to reopen the country’s land borders for importation of items into the country.
The NBS report showed that the percentage change in the average composite CPI for the twelve months period ending December 2020 over the average of the CPI for the previous twelve months period was 13.25 per cent, representing a 0.33 per cent point increase over 12.92 per cent recorded in November 2020.
The urban inflation rate increased by 16.33 per cent (year-on-year) in December 2020 from 15.47 per cent recorded in November 2020, while the rural inflation rate increased by 15.20 percent in December 2020 from 14.33 per cent in November 2020.
On a month-on-month basis, the urban index rose by 1.65 per cent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 per cent in December 2020, up by 0.02 per cent above the rate that was recorded in November 2020 (1.56 per cent).
The corresponding twelve-month year-on-year average percentage change for the urban index is 13.86 per cent in December 2020.
This is higher than 13.55 percent reported in November 2020, while the corresponding rural inflation rate in December 2020 was 12.67 per cent compared to 12.35 per cent recorded in November 2020.
Food Index
Particularly, the composite food index rose by 19.56 per cent in December 2020 compared to 18.30 percent in November 2020.
This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On month-on-month basis, the food sub-index increased by 2.05 percent in December 2020, up by 0.01 per cent points from 2.04 per cent recorded in November 2020.
The average annual rate of change of the Food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 per cent, 0.42 percent points from the average annual rate of change recorded in November 2020 (15.75) per cent.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said this week that government planned to keep inflation at 11.95 per cent by year end, following the Central Bank of Nigeria (CBN)’s inability to keep it within a single-digit target range of between 6 to 9 per cent for more than four years.
The December figure surpassed the forecast of market intelligence firm Financial Derivatives, which projected a 15.4 per cent inflation rate for December.
“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs,” Financial Derivatives said in a note.
