The inflation rate in Nigeria reached 20.52 percent in August 2022, representing a 3.51 percentage point surge from the rate recorded in the corresponding month in 2021 (17.01 percent). This means that the general price level in August 2022 was 3.51 percent higher than in August 2021.
This is according to the (CPI) report for August 2022 released by the National Bureau of Statistics (NBS).
Conversely, the consumer price index in August 2022 declined to 1.77 percent on a month-on-month basis, constituting a 0.05 fall in the price levels when compared to the previous month.
The average consumer price index for the 12 months ending August 2022 surged 0.47 percent to reach 17.07 percent, rising from 16.60 percent for the same index (12-month average) for August 2021.
According to NBS, the decline in the current month’s food index relative to the reference month index was due to harvest season, and the relative stability in transportation costs as a result of the availability of fuel. In addition, disruption in the supply of food products, increase in import cost due to the persistent currency depreciation, and the general increase in the cost of production were the propellers of the increase in the annual inflation rate.
The urban inflation rate in August 2022 was 20.95 percent on a year-on-year basis, rising by 3.36 percent from the 17.59 % recorded in August 2021. On a month-on-month basis, this index declined 0.03 percent to stand at 1.79 percent in August 2022, compared to the previous month (1.82 percent). Also, the year-on-year rural inflation rate was 20.12 percent; higher by 3.39 percent when compared to 16.43 percent recorded in August 2021. On a month-on-month basis, this index was 1.75 percent in August 2022, down by 0.06 percent compared to 1.81 percent in July 2022.
States with the highest month-on-month inflation in August 2022 were Anambra (2.78%), Ondo (2.53%), Nasarawa (2.40 %), while Yobe (0.68%), Borno (0.84%), and Zamfara (0.98%) recorded the slowest rise on month-on-month inflation.
Food Inflation
The year-on-year food inflation rate stood at 23.12 percent in August 2022; up by 2.82 percent when compared to the rate recorded for the corresponding month in August 2021. The rise in food inflation was on the wings of high prices for bread and cereals, food products n.e.c, potatoes, yam and other tubers, fish, meat, oil and fat, according to NBS.
The statistics bureau also disclosed that the month-on-month food inflation rate was 1.98 percent, a 0.07 percent decline from July 2022 (2.04 percent). This decline was a result of the reduction in prices of some food items like tubers, garri, local rice and vegetables.
The highest month-on-month food inflation in August 2022 was recorded in Anambra (3.05%), Ondo (2.92%) and Bauchi (2.78%), while Yobe (0.46%), Oyo (0.89%) and Delta (0.94%) recorded the slowest rise on month-on-month inflation.
Core Inflation
Otherwise known as ‘’All items less farm produce,’’ the core inflation which excludes the prices of volatile agricultural produce raced to 17.20 percent in August 2022 on a year-on-year basis; rising by 3.79% from August 2021 recorded (13.41%). Conversely, this index stood at 1.59 percent month-on-month in August 2022, down by 0.17% when compared to 1.75% recorded in July 2022.
According to NBS, the major items that contributed to the core inflation were Gas, Liquid fuel, Solid fuel, Passenger transport by road, Passenger transport by Air, fuel and lubricants for personal transport equipment, Cleaning, Repair and Hire of clothing.
What you should Know
Nigeria’s headline Inflation has continued to worsen despite the CBN’s interest rate hikes. Notably, at the MPC meeting held in July 2022, the apex bank showed concerns about the ineffectiveness of interest rate hikes in containing inflation–“the MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its last meeting.”
Nigeria’s inflation is not consumption driven. It is not necessarily improvement in people’s welfare or economic improvement that is fueling the inflation. However, a significant degree of cost-push and import-inflationary forces exacerbated by bottlenecks from the external sector are major propellers of the country’s inflation.
By and large, interest rate hikes cannot resolve the remaining pandemic-related bottlenecks in global supply chains and disruptions in commodities markets due to the war in Ukraine. This basically suggests that interest rate hikes alone is not a appropriate tool for containing Nigeria’s inflation.
