Nigeria’s Inflation rate jumps to 19.64 percent in July 2022 from the 18.60 percent recorded in the last month.
This means a 1.82% month-on-month hike, according to the (CPI) report for July 2022 released by the National Bureau of Statistics (NBS)
The urban inflation rate in July 2022 was 20.09 percent on a year-on-year basis, rising by 2.08 percent from 18.01 percent recorded in July 2021. On a month-on-month basis, this index, however, declined by 0.0002 percent to stand at 1.81 percent from the 1.82 percent recorded in June 2022. The rural inflation rate for the same period was 19.2 percent on a year-on-year basis, rising by 2.47 percent compared to the 6.75 percent recorded in July 2021.
The states with the highest all-items inflation on a month-on-month basis in July 2022 were Adamawa (2.87%), Abuja (2.84%), Oyo (2.77%), while Bauchi (0.82%), Kano (0.83%) and Niger (1.03%) recorded the slowest rise on month-on-month inflation.
The food index, which captures the price levels for food items, rose to 22.02 percent in July 2022, 0.99 percent higher compared to July 2021 (21.03). This rise in food inflation was caused by increases in prices of Bread and cereals, Food products n.e.c, Potatoes, yams and other tubers, meat, fish, oil, and fat.
On a month-on-month basis, the food sub-index dropped to 2.04 percent in July 2022, down by an insignificant 0.01 percent points from 2.05 percent recorded in June 2022. This decline is attributed to a reduction in the prices of some food items like Tubers, Maize, Garri, and Vegetables.
The states with the highest food inflation on a month-on-month basis in July 2022 were Kwara (3.90%), Delta (3.61%), and Benue (2.94%), while Taraba (0.14%), Gombe (0.94%), and Niger (1.13%) recorded the slowest rise on month-on-month inflation.
The core inflation or “all items less farm produce” which computationally excludes the prices of volatile agricultural produce, rose to 16.26 percent in July 2022 on a year-on-year basis, going up by 2.54 percent when compared to 13.72% recorded in July 2021. On a month-on-month basis, the core inflation rate ticked up to 1.75% in July 2022. This was up by 0.20% when compared to 1.56% recorded in June 2022.
Prices of Gas, Liquid fuel, Solid fuel, Passenger transport by road, Passenger transport by Air, Garments, Cleaning, Repair and Hire of clothing were the drivers of this increase.
What you need to know
In July 2022, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR) by 100 basis points to 14 percent in a bid to tame the rising inflation which ticked up in June by 0.89 percent from May’s inflation figure. Despite the rise in the MPR, the inflation figure for July still shot up by 1.04 percent, suggesting that the rising price level in the country is not demand-induced.
According to NBS data, the core inflation in July was driven by the increase in prices of fuel (liquid and solid), gas, passenger transport (road and air), and other items. This implies that the elevated oil prices are a major cause of the rising core inflation.
Also, it can be deduced that the rising global commodity prices, particularly wheat, raised the cost of bread production, causing the price of bread to be one of the contributors to food inflation. Other food products like cereal for which a significant volume of its importation is used to support domestic demand also contributed to food inflation.
The rising price level in the country is mainly because of Nigeria’s vulnerability to external shocks and the pass-through effects of these shocks on core inflation. A further hike in MPR may not solve the problem but will tighten the already contract monetary landscape and clamp down on investment activities in the country.