Nigeria’s inflation rate accelerates to 15.7% by fuel scarcity

Nigeria’s inflation rate rose at a faster pace to 15.7% in February from 15.6% in the previous on the back of fuel scarcity which the country has been grappling with for almost two months.

The latest Consumer Price Index (CPI) report which measures the country inflation rate released by the National Bureau of Statistics (NBS) showed the rise represented a 0.1% point increase compared to the rate recorded in January 2022.

The uptick was attributed to the increase in the price of goods and services, following the fuel scarcity across the country in February.

Analysts had predicted an uptick in the inflation figures for the month of February 2022, owing to the ripple effect of fuel scarcity on the cost of transportation, operation cost, food prices, amongst others.

The consumer price index rose by 15.7% year-on-year from 366.8 index points recorded in February 2021 to 424.4 points in February 2022.

On a month-on-month basis, the headline index increased to 1.63% in February 2022, which is 0.16% rate higher than the rate recorded in January 2022 (1.47%).

The urban inflation rate increased to 16.25% (year-on-year) in February 2022 from 17.92% recorded in February 2021, while the rural inflation rate increased to 15.18 per cent in February 2022 from 16.77 per cent in February 2021.

Core inflation also rose to its highest level in over 4 years at 14.01%, while food inflation dropped to 17.11% in the review period from 17.13% recorded in January 2022.

Food inflation
The food inflation rate, which is a closely watched index dropped to 17.11% in February 2022 from 17.13% recorded in the previous month. This represents the lowest food inflation rate recorded in Nigerian since September 2020.

A food market in Nigeria

According to the NBS report, the highest increases in food prices were of bread and cereals, food product, potatoes, yam and other tubers, oils and fats and fruits.

On a month-on-month basis, the food sub-index increased to 1.87% in February 2022, up by 0.25% points from 1.62% recorded in January 2022.

The average annual rate of change of the Food sub-index for the twelve-month period ending February 2022 over the previous twelve-month average was 19.69%, which is 0.4% lower than the average annual rate of change recorded in January 2022 (20.09$).

Core inflation
The Core inflation, which excludes the prices of volatile agricultural produce stood at 14.01% in February 2022, up by 0.14% when compared to 13.87% recorded in January 2022.

This is the highest core inflation rate in over 4 years, since April 2017, largely attributed to the significant increase in the price of petroleum products due to scarcity.

According to the report, the highest increases were recorded in prices of gas, liquid fuel, wine, tobacco, spirit, narcotics, solid fuels, cleaning, repair and hire of clothing, garments, shoes and other footwear, other services in respect of personal transport equipment, clothing materials, other articles of clothing and clothing accessories, and other services.

State inflation
In February 2022, all items inflation on a year-on-year basis was highest in Cross River State (18.84%), Gombe State (17.70%) and Abuja, the Federal Capital Territory (17.68%), while Kwara state (13.82%), Sokoto State (13.93%) and Anambra State (14.43%) recorded the slowest rise in headline year-on-year inflation.

On the other hand, food inflation on a year-on-year basis was highest in Kogi State (21.04%), Enugu State (20.31%) and Kwara State (20.03%), while Sokoto State (13.89%), Anambra State (14.18%) and Bauchi State (14.43%) recorded the slowest rise in year-on-year food inflation.

Its Implication
The increase in Nigeria’s inflation rate means that Nigerians’ purchasing power is been eroded by the increase in the prices of goods and services.

In other words, your money is now worth lesser than it was in the previous month. (Nairametrics)