Nigeria’s rate of inflation, which has maintained a continuous increase for more than a year, rose again in March, hitting a high of 18.17 per cent, according to data released on Thursday by the National Bureau of Statistics.
A number of experts interviewed by our correspondents said the development was troubling and blamed insecurity, low production and foreign exchange crisis.
In its Consumer Price Index report for March 2021, the NBS stated that the CPI, which measures inflation, was higher than what was recorded in the preceding month.
It said, “The consumer price index, which measures inflation increased by 18.17 per cent (year-on-year) in
“This is 0.82 per cent points higher than the rate recorded in February 2021 (17.33 per cent).”
It explained that increases were recorded in all Classification of Individual Consumption by Purpose divisions that yielded the headline index.
On month-on-month basis, the headline index increased by 1.56 per cent in March 2021, which was 0.02 percentage points higher than the rate recorded in February 2021 (1.54 per cent).
The percentage change in the average composite CPI for the 12 months period ending March 2021, over the average of the CPI for the previous 12 months period was 14.55 per cent.
This represented a 0.50
per cent point increase over 14.05 per cent recorded in February 2021.
The urban inflation rate increased by 18.76 per cent (year-on-year) in March 2021 from 17.92 per cent
recorded in February 2021, while the rural inflation rate increased by 17.60 per cent in March 2021 from
16.77 per cent in February 2021.
Mounting inflationary pressure troubling, says LCCI
The Director-General of the Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, said tackling inflation required urgent government intervention to address the challenges bedevilling the supply side of the economy.
“Mounting inflationary pressure is a troubling phenomenon. The March headline inflation of 18.17 per cent is the highest in four years. More worrisome is that food inflation has accelerated to 23 per cent,” he said.
According to him, the key drivers of the mounting inflation are currency depreciation, acute illiquidity in the foreign exchange market, rising transportation costs, agricultural output disruptions caused by growing insecurity, logistics challenges, hike in energy prices, climate change, and structural bottlenecks to production.
He said, “These are essentially supply-side issues. The major issues are cost and output-related. The solution therefore would have to be situated in the context of these causal factors.
“Rising inflationary pressures weaken the purchasing power of citizens as real incomes collapse; it accentuates pressure on production costs, negatively impacts profitability, and undermines investors’ confidence.”
According to Yusuf, it is not in all cases that high production and operating costs can be passed on to the consumers.
“The implication is that producers are also taking a hit. This is more severe where a product or service is faced with high demand elasticity. These are products that consumers can readily do without,” he said.
Outputs low, pressure still up – Rewane
Analysts at Financial Derivatives Company Limited, led by Mr Bismarck Rewane, said the spike in the annual general food price level was an indication that output levels were below what was recorded in March 2020 (pre-COVID lockdown).
The analysts said, “We expect a further build-up in inflationary pressures in the coming months as a result of the planting season, heightening insecurity issues, currency pressures and high-powered money.
“Inflation rate above 18 per cent could prompt the CBN to adopt a tighter monetary policy stance at its meeting next month. As interest rates increase, we expect the marginal propensity to save to rise, thus reducing liquidity and tapering inflation,” they added.
A professor of economics, Babcock University and past President, Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, said the inflationary pressure in Nigeria today was cost push and the only solution to this was to tackle the source which includes rising costs of inputs and infrastructures especially power among others.