Nigeria’s February inflation rate hits 17.33% – The National Bureau of Statistics (NBS) yesterday said the inflation rate rose from 16.46 per cent in January to 17.33 per cent in February 2021.
Its Consumer Price Index February 2021, said: “The consumer price index (CPI), which measures inflation increased by 17.33 per cent (year-on-year) in February 2021.”
NBS added that this is 0.86 per cent points higher than the rate recorded in January 2021 (16.47) percent.
Increases were recorded in COICOP divisions that yielded the Headline index.
The Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, yesterday warned that rising inflation and unemployment will worsen the country’s misery level and could trigger social unrest if not checked.
The report said urban inflation increased by 17.92 per cent (year-on-year) in February 2021 from 17.03 per cent recorded in January, while the rural inflation rate increased by 16.77 per cent in February 2021 from 15.92 per cent in January 2021.
NBS said monthly, the Headline index increased by 1.54 per cent last month. This is 0.05 per cent rate higher than the rate recorded in January 2021 (1.49 percent).
It also noted that the percentage change in the average composite CPI for the 12- month period ending last month over the average of the CPI for the previous twelve months period was 14.05 percent, showing 0.43 percent point from 13.62 percent recorded in January 2021.
According to NBS, on a month-on-month basis, the urban index rose by 1.58 per cent in February 2021, up by 0.06 the rate recorded in January 2021, while the rural index also rose by 1.50 per cent in February 2021, up by 0.04 the rate that was recorded in January 2021 (1.46) per cent.
The Lagos Chamber of Commerce & lndustry (LCCI), Director General, Dr Muda Yusuf said the 17.5 per cent rise in inflationary figure will have many variables that will impact domestic prices. These factors include transportation costs logistics challenges, exchange rate depreciation, forex liquidity issues, hike in energy prices, climate change, insecurity in many farming communities and structural bottlenecks to production. In an interview he told The Nation these are essentially supply side issues. “Any mitigation measures would have to be situated in the context of these variables. Even the CBN had admitted that the potency of monetary policy instruments in tackling inflation is weak”.
“Mounting inflationary pressures weakens purchasing power of citizens as real incomes are eroded, it accentuates pressure on production costs, it negatively impacts profitability, and undermines investors confidence”. He stressed that
It is not in all cases that high production costs can be transferred to consumers. He added that the implication is that producers are also taking a hit. “This is more pronounced where the demand for the product is elastic. These are products that consumers can readily do without.
Tackling inflation requires urgent government intervention to address the challenges bedevilling the supply side of the economy”, he added.
“This is more pronounced where the demand for the product is elastic. These are products that consumers can readily do without.
Tackling inflation requires urgent government intervention to address the challenges bedevilling the supply side of the economy”, he added.
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The corresponding 12-month year-on-year average percentage change for the urban index is 14.66 percent in February 2021. This is higher than 14.23 per cent reported in January 2021, while the corresponding rural inflation rate in February 2021 is 13.48 percent compared to 13.04 percent recorded in January 2021.
On all item index, the report said this rise in the food index was caused by increases in prices of Bread and cereals, potatoes, yam and other tubers , meat, food production, fruits,vegetable, fish and oils and fats.
NBS said the composite food index rose by 21.79 per cent in February 2021 compared to 20.57 percent in January 2021 on month-on-month basis, the food sub-index increased by1.89 per cent in February 2021,up by 0.06 per cent points from1.83 per cent recorded in January 2021.
It said the average annual rate of change of the Food sub-index for the twelve-month period ending February 2021over the previous twelve-month averagewas17.25 per cent, 0.59 per cent points from the average annual rate of change recorded in January 2021(16.66) per cent.
Rewane said the consumer price index spiked further in February by 0.86 per cent to 17.33 per cent, marginally higher than analysts forecast.
He attributed the inflation rise to commodity supply disruptions, forex rationing and exchange rate pass through.
He said the currency adjustment has affected all imported commodities – wheat, dairy products, among others.
He added that inflation upbeat began since September 2019 after the land borders were closed to curb smuggling and encourage local production.
Rewane said at the current level, headline inflation is almost 100 per cent above the upper band of the Central Bank of Nigeria (CBN’s) inflation target of nine per cent.
“The inflation spiral this time is driven mainly by rapidly increasing ways and means advances (money supply saturation), commodity supply disruptions, forex rationing and exchange rate pass-through. Currency adjustments have affected all imported commodities – wheat, dairy products, among others. Cost push inflation increased partly due to re-pricing of Premium Motor Spirit (PMS) and kerosene,” he said.
Rewane said the combination of rising inflation and higher unemployment (33.3 per cent) suggests that the trade-off between inflation and unemployment no longer exists.
According to him, rising inflation and unemployment will worsen the country’s misery level and could trigger social unrest. “Addressing both challenges will require ‘sequencing’, that is, attacking one challenge before the other. Moreover, inflation is a monetary phenomenon while unemployment is a fiscal phenomenon.
“We expect a further build up in inflationary pressures in the coming months largely because of the persistent increase in the price of fuel and exchange rate pressures,” he added.