Inflation hit the highest in more than four years in March 2021 at 18.17 percent and analysts expect a further uptick in April on the back of prolonged insecurity and weak FX liquidity.
“In April 2021, we expect consumer prices to climb by 18.76 percent YoY, from 18.17 percent YoY reported in March,” analysts at Meristem Securities said.
This signals a decline in purchasing power of Nigerians as prices of goods and services are skyrocketing without a corresponding increase in income, making life miserable for the country’s large population.
According to them, the prolonged insecurity headwinds in the Northern region from March impacted food supply in food-producing states, as reports of kidnappings and banditry have intensified across the country.
“We note the hike in prices of poultry products stemming from reduced supply of maize. Being the maize belts of the nation, increased insecurity in states like Kaduna and Borno has affected the planting of the crop. The situation, which is further worsened by adverse weather conditions has ultimately led to higher prices of the commodity.”
The Central Bank of Nigeria (CBN) in an effort to combat the effect of a higher cost of sugar and wheat in the international market, announced plans to place FX restriction on these commodities in an effort which was intended to spur local production could also lead to higher prices of these commodities, the analysts say.
Food prices rose 1.16 percentage points from the previous month to 22.95 percent in March, the National Bureau of Statistics (NBS) said.
The analysts also pointed out that food prices have increased markedly since Ramadan began which could be a result of the reduced productivity of Northern farmers who are predominantly Muslims.
Omotola Abimbola, assistant vice president at Chapel Hill Nigeria also said there would be a further uptick in the inflation rate to 18.7 percent in April.
He explained that this will come as a result of food shortage, weak FX liquidity, the recent adjustment in power tariff, although the impact might not be felt directly, it would have an indirect impact on the broader core inflation.
Temitope Omosuyi an Investment Strategy Analyst at Afrinvest Limited said Nigeria’s headline inflation rate would hit 18.8 percent in April.
This would be as a result of heightened insecurity and the FX challenges facing Importers and manufacturers.