New Telegraph

Inflation maintains spike, rises to 12.82%

Analysts
  • Food prices drive surge

 

  • MAN, LCCI fret

 

Consumer price index (CPI), which measures inflation, sustained its upward trend in July, peaking at 12.82 per  cent (year-on-year) from June’s figure of 12.56 per cent.

 

The latest figure released yesterday by National Bureau of Statistics (NBS) represents 0.26 per cent points higher than the rate  recorded in June 2020 (12.56) per cent.

 

This is coming just as members of the organised private sector, represented by Manufacturers Association of Nigeria (MAN) and Lagos Chamber of Commerce and Industry (LCCI), expressed concern over the consistent rise.

 

NBS, in its report, noted that the rise in food index was caused by increases in prices of bread, cereals, potatoes and yam. Increase in prices was also recorded in meat, fruits, oils and fats, and fish.

 

Increases were recorded in all COICOP divisions that yielded the headline index. On month-on-month basis, the headline index increased by 1.25 per cent in July 2020. This is 0.04 per cent rate higher than the rate recorded in June 2020 (1.21) per cent.

 

The percentage change in the average composite CPI for the 12-month period ending July 2020 over the average of the CPI for the previous months was 12.05 per cent, representing a 0.15 per cent point increase from 11.90 per cent recorded in June 2020.

 

The urban inflation rate increased by 13.40 per cent (year-on-year) in July 2020 from 13.18 per cent recorded in June 2020, while the rural inflation rate increased by 12.28 per cent in July 2020 from 11.99 per cent in June 2020.

 

On a month-on-month basis, the urban index rose by 1.27 per cent in July 2020, up by 0.04 from 1.23 per cent recorded in June 2020, while the rural index also rose by 1.23 per cent in July 2020, up by 0.04 per cent from the rate recorded in June 2020 (1.19) per cent.

 

“The corresponding 12-month year-on-year average percentage change for the urban index was 12.66 per cent in July 2020. This is higher than 12.50 per cent reported in June 2020, while the corresponding rural inflation rate in July 2020 is 11.49 per cent, compared to 11.36 per cent recorded in June 2020.

 

“On month-on-month basis, the food sub-index increased by 1.52 per cent in July 2020, up by 0.04 per cent points from 1.48 per cent recorded in June 2020. “The average annual rate of change of the food sub-index for the 12-month period ending July 2020 over the previous period average was 14.63 per cent, 0.17 per cent points from the average annual rate of change recorded in June 2020 (14.46) per cent,” said NBS.

 

It added: “All items less farm produce or core inflation, which excludes the prices of volatile agricultural produce, stood at 10.10 per cent in July 2020, down by 0.03 per cent when compared with 10.13 per cent recorded in June 2020. “On month-on-month basis, the core sub-index increased by 0.75 per cent in July 2020. This was down by 0.11 per cent when compared with 0.86 per cent recorded in June 2020.”

 

The highest increases were recorded in prices of medical services, passenger transport by air, pharmaceutical products, hospital services, passenger transport by road, maintenance and repair of personal transport equipment, paramedical services and vehicle spare parts.

 

Price movement varies state-by-state in the month under consideration. In July 2020, all items on year-on-year basis were highest in Bauchi (16.10%), Kogi (15.90%), Sokoto and Plateau (15.20%), while Lagos (10.70%), Adamawa (10.60%) and Kwara (10.50%) recorded the slowest rise in headline year-on-year inflation.

 

On month-on-month basis, however, in July 2020, all items inflation were highest in Kogi (2.85%), Zamfara (2.44%) and Yobe (2.35%), while Ondo (0.67%), Adamawa (0.63%), Ogun and Imo (0.62%) recorded the lowest rise in headline month-onmonth inflation. In July 2020, food inflation on a year-on-year basis was highest in Kogi (20.09%), Sokoto (19.28%) and Plateau (18.05%), while Adamawa (13.37%), Abia (13.33%) and Lagos (13.13%) recorded the lowest rise.

 

On month-on-month basis, however, July 2020 food inflation was highest in Zamfara (3.40%), Kogi (3.32%) and Yobe (3.00%), while Niger and Ogun (0.44%), Lagos (0.41%) with Adamawa recording price deflation or negative inflation (general decrease in the general price level of food or a negative food inflation rate). Meanwhile, the Lagos Chamber of Commerce and Industry (LCCI) advised that the Federal Government should urgently fix the structural problems fuelling inflationary pressure on the country.

 

The chamber noted that the biggest challenge facing the country’s inflation rate was the rise in food prices. The Director-General of the LCCI, Dr. Muda Yusuf, in an interview with New Telegraph in Lagos, said that moderating the rising inflation rate was not of much importance than containing that of food inflation, which is a bigger issue that needs to be dealt with.

 

The LCCI director-general explained that food inflation rate hit 14.67 per cent in December 2019, the highest in the last 20 months, adding that this was a danger signal to the country’s agric sector value chain. Yusuf said: “We contend that food inflation is the bigger issue that needs to be dealt with in the inflation equation.

 

Over the past few years, food inflation has stubbornly remained in double-digit territory since June 2015 while core inflation trends in single digit. “We believe that food inflation is not driven by liquidity nor is it a monetary phenomenon.

 

The continuous uptrend in inflation is driven largely by cost-push factors rather than demandpull factors. “Against this backdrop, the way forward lies in fixing the structural problems fuelling inflationary pressure as monetary policy instruments will have almost no impact in moderating inflation.”

 

On his part, the Acting Director-General of Manufacturers Association of Nigeria (MAN), Paul Oruche, explained that the rising inflation rate was not good for the country’s industrial sector as the final consumer would continue to pay higher for goods. He noted that the purchasing power of Nigerians was still low.

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