Nigeria’s Inflation rate surges to a new 17-year high of 20.77% in September
In September 2022, Nigeria’s inflation rate rose to 20.77 percent, up from 20.52 percent recorded In August.
This is according to the September 2022 Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS).
The rise in the general price level of goods and services in September 2022 was 1.36 percent, down from 1.77 percent recorded in August 2022. This means that in September, though the inflation rate was still rising, it slowed by 0.41 percent. However, inflation was higher relative to September 2021, as it was 4.14 percent higher when compared to 16.63 percent recorded for the same period in 2021.
This inflation rate represents the highest in 17 years according to data from the NBS and CBN, which shows the inflation rate reaching 24.3 percent in September 2005.
States with the highest month-on-month all items inflation in September were Jigawa (2.58%), Yobe (2.22%), Benue (2.05%), while Abuja (-0.72%), Sokoto (-0.19%) and Adamawa (0.25%), which recorded the slowest increase in month-on-month inflation.
The urban inflation rate which exceeded core inflation raced to 21.25 percent in September on a year-on-year basis. This is 4.06 percent higher compared to 17.19 recorded for the same period in 2021. On the other hand, the month-on-month urban inflation rate which was 1.46 percent slowed by 0.34 percent in September compared to August 2022 (1.79).
The rural inflation rate in September was 20.32 percent year-on-year. This remains elevated above 16.08 percent in September 2021. On a month-on-month basis, the rural inflation was 1.27 percent, declining by 0.48 percent compared to August 2022 (1.75%).
Notably, Nigeria’s inflation has been declining monthly due to a reduction in the changes in the food index relative to the reference month index which is due to the present harvest season. Conversely, annual inflation has been on the rise due to disruption in the supply of food products, an increase in import cost due to persistent currency depreciation, and the general increase in the cost of production, according to the NBS.
Food Inflation
In September 2022, the food inflation rate rose to 23.34% on a year-on-year basis. It was 3.77% higher compared to the rate recorded in September 2021 (19.57%). 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, oil, and fat, according to the NBS.
States with the higiest month-on-month food inflation in September 2022 were Enugu (2.61%), Ogun (2.50%), and Oyo (2.43%), while Sokoto (-0.88%), Ondo (0.38%) and Niger (0.62%).
On a month-on-month basis, the food inflation rate in September fell by 0.54%, having dropped to 1.43% when compared to the rate recorded in August 2022 (1.98%). Based on the NBS CPI report, this decline was attributed to a reduction in prices of some food items like Tubers, Palm oil, Maize, Beans, and Vegetables.
Core Inflation
The core inflation or “all items less farm produce” was 17.60 percent in September 2022 on a year-on-year basis. It rose by 3.86 percent when compared to 13.74 percent recorded in September 2021. However, on a month-on-month core inflation rate stabilized at 1.59 percent. This was relatively the rate recorded in the previous month.
What you should know
Inflation has slowed month-on-month. But the question to ask is whether the CBN interest rates hike has been the cause. From NBS data, it can be deduced that the increase in the availability of food items due to the present harvest season has resulted in a decline in the pace of price changes.
We can see that while the CBN interest rate hikes may be instrumental in defending the naira against the strengthening dollar and helping to attract foreign investors in naira-denominated investments, it has not yet had a significant impact on slowing inflation.
Finding a solution to the supply-chain disruption and increasing importation will help beat down inflation which has been rising due to these aforementioned factors.
However, if the CBN can put a stop to, or reduce the depreciation of the naira, importation cost (in naira terms) will not feed inflation so much.
