By Ayo Yusuf
A combination of rising food prices and shortage of foreign exchange has pushed the nation’s inflation rate to a record 24.08%, the highest in years.
The removal of petrol subsidy had a domino effect on a number of commodities, including foodstuffs, which had now resulted in spiraling inflation.
The July 2023 rate showed an increase of 1.29% points when compared to the June’s which was 22.79%, the National Bureau of Statistics (NBS) said in its Consumer Price Index (CPI) report released on Tuesday.
The CPI measures the rate of change in prices of goods and services.
On July 25, 2023, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR), which measures interest rate, from 18.5 percent to 18.75%.
The interest rate increase occurred amid soaring food prices and rising cost of transportation occasioned by the removal of subsidy on Premium Motor Spirit (PMS) known as petrol with the price per litre jumping from N184 to about N600, more than 200% hike.
The apex bank said “hiking the interest rate has made a lot of difference in moderating the rate of inflation.”
In order to address the forex shortage in the country with dollar exchanging at over N900 to the naira, Acting CBN Governor, Folashodun Shonubi, on Monday, said the apex bank would take certain steps in the next few days to improve the liquidity in the market.
Mr Tinubu had in July declared an immediate State of Emergency on food insecurity to tackle the increase in food prices.
He also directed that “all matters pertaining to food & water availability and affordability, as essential livelihood items, be included within the purview of the National Security Council.”
In its inflation report Tuesday, the NBS said the contributions of items on the divisional level to the acceleration in the headline index are food & non-alcoholic beverages (12.47 per cent), housing water, electricity, gas & other fuel (4.03 per cent), clothing & footwear (1.84 per cent), transport (1.57 per cent), furnishings & household equipment & maintenance (1.21 per cent), education (0.95 per cent), health (0.72 per cent), miscellaneous goods & services (0.40 per cent), restaurant & hotels (0.29 per cent), alcoholic beverage, tobacco & kola (0.26 per cent), recreation & culture (0.17 per cent) and communication (0.16 per cent).
On a month-on-month basis, the report said the headline inflation rate in July 2023 was 2.89 per cent, which was 0.76 per cent higher than the rate recorded in June 2023 (2.13 per cent).
This means that in July 2023, on average, the general price level was 0.76 per cent higher relative to June 2023.
The percentage change in the average CPI for the twelve months ending July 2023 over the average of the CPI for the previous twelve-month period was 21.92 per cent, showing a 5.17 per cent increase compared to 16.75 per cent recorded in July 2022,” the report said.
Food Inflation
The food inflation rate in July 2023 was 26.98 per cent on a year-on-year basis, which was 4.97 per cent points higher compared to the rate recorded in July 2022 (22.02 per cent).
The bureau said the rise in food inflation on a year-on-year basis was caused by increases in prices of oil and fat, bread and cereals, fish, potatoes, yam and other tubers, fruits, meat, vegetables, milk, cheese, and eggs
“On a month-on-month basis, the Food inflation rate in July 2023 was 3.45 per cent, this was 1.06 per cent higher compared to the rate recorded in June 2023 (2.40 per cent).
“On a month-on-month basis, the report said the rise was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, fish, oil, and fat.
“The average annual rate of food inflation for the twelve-month ending July 2023 over the previous twelve-month average was 24.46 per cent, which was a 5.71 per cent points increase from the average annual rate of change recorded in July 2022 (18.75 per cent),” it said.
