The Consumer Price Index (CPI), which measures the inflation rate in the economy, moderated to 16.82 percent in April, a 7.17 percent decline as compared to the 18.12 percent recorded in the corresponding quarter in April 2021. This was disclosed in the National Bureau of Statistics (NBS) data released yesterday.
This means that the headline inflation rate slowed down in April when compared to the same month in the previous year. Although, the NBS, noted that increases were recorded in all Consumption According to Purpose (COICOP) divisions that yielded the headline index.
This was disclosed in the National Bureau of Statistics (NBS) data released yesterday.
However, on a month-on-month basis, the headline inflation rose by about 5.65 percent to 16.82 percent in April from the 15.92 percent recorded in March.
The NBS however ascribed this to the increases in the prices of gas, liquid fuel, cleaning, repair and hire of clothing, clothing materials, other articles of clothing, and clothing accessories.
According to the NBS, the composite food index moderated at 18.37 percent in April 2022, compared to 22.72 percent in the corresponding period the previous year. While on a month-on-month basis, the sub-index increased to 2 percent in April, a 0.01 percentage point increment from 1.99 percent recorded in March.
The NBS attributed the rise in the food index in the April data released to the price of bread and cereals; food products such as potatoes, yam, and other tubers; wine, fish, meat, and oils.
The average 12-month annual rate of change of the index was 13.68 percent for the 12-month period ending April 2022; this is 0.12 percent points higher than the 13.56 percent recorded in March.
The percentage change in the average composite CPI for the 12- month period ending April 2022, over the average of the CPI for the previous12-month period was 16.45 percent, showing a 0.1 percent decrease compare to the 16.54 percent recorded in March.
However, the urban inflation rate increased to 17.35 percent (year-on-year) in April 2022 from 18.68 percent recorded in April 2021, while the rural inflation rate increased to 16.32 percent in April 2022 from 17.57 percent in April 2021” the NBS, said.
What could this mean for Nigeria?
The increase in the inflation rate of the country to its highest in eight months (16.82%) with the real GDP averaging at 3.38% in 2021, shows that the economy is heading towards stagflation.
Although the Monetary Policy Committee’s (MPR) stance on increasing interest rates has been on hold since the C0VID-19 pandemic outbreak, analysts predict that the MPR in its next meeting would probably increase the interest rate.
Their decision may be influenced majorly by the fact that this year is a pre-electioneering year and political campaigns will create a surge in the supply of money supply in the economy. Thus, this might drive the inflation rate even higher.
On the other hand, the MPR might consider the Russian –Ukraine war effect on the economy and the gradual recovery of the economy from the economic recession it faced in 2020 resulting from the twin shock of the oil price crash and the COVID-19 pandemic.
