As Nigerians groan under flood-engineered inflation…

The October inflation rate of 21.09 per cent did not come to many Nigerians as a surprise considering the flooding which affected many farming communities and disrupted economic activities in 30 states. This further drove up the prices of goods and services; JAMIN UMUTEME writes.

In its consumer price index (CPI) report for the month of October released on Tuesday, the National Bureau of Statistics (NBS) stated that Headline inflation rose to 21.09 per cent, an indication that inflation increased 32bp from 20.77% in September.

Since the beginning of 2022, Nigerians have been grappling with high costs of goods and services largely as a result of the surge in energy prices and persistent exchange rate devaluation in the country.

The CPI report

In the report published on its website Tuesday, the Bureau disclosed that in October 2022, on a year–on–year basis, the headline inflation rate was 21.09%. This was 5.09% points higher compared to the rate recorded in October 2021, which was 15.99%. According to the Bureau, it revealed that the general price level for the headline inflation rate increased in October 2022 when compared to the same month in the preceding year (i.e., October 2021) by 5.09%.

On a month-on-month basis, the Headline inflation rate for October 2022 was 1.24%, this was 0.11% lower than the rate recorded in September 2022 (1.36%). This means that in October 2022 the general price level for the headline inflation rate (month–on–month basis) declined by 0.11%.

The percentage change in the average CPI for the twelve months ending October 2022 over the average of the CPI for the previous twelve months period was 17.86%, showing a 0.91% increase compared to the 16.96% recorded in October 2021.

According to the NBS, likely factors are responsible for the decline in monthly inflation rate (Month-on-month basis).

Over the past three months, there has been a decline in headline inflation on a month-on-month basis due to a decline in the changes in the food index relative to the reference month index. This was due to disruption in the supply of food products, increase in cost of importation due to the persistent currency depreciation, and general increase in the cost of production e.g increase in energy cost.

Urban inflation

On a year-on-year basis, in October 2022, the urban inflation rate was 21.63%, this was 5.11% higher compared to the 16.52% recorded in October 2021. On a month-on-month basis, the urban inflation rate was 1.33% in October 2022, this was a 0.12% decline compared to September 2022 (1.46%). The corresponding twelve-month average for the urban inflation rate was 18.38% in October 2022. This was 0.85% higher compared to the 17.53% reported in October 2021.

Rural inflation

The rural inflation rate in October 2022 was 20.57% on a year-on-year basis; this was 5.09% higher compared to the 15.48% recorded in October 2021. On a month-on-month basis, the rural inflation rate in October 2022 was 1.16%, which was down by 0.11% compared to September 2022 (1.27%). The corresponding twelve-month average for the rural inflation rate in October 2022 was 17.38%. This was 0.98% higher compared to the 16.39% recorded in October 2021.

Food inflation

The food inflation rate in October 2022 was 23.72% on a year-on-year basis; which was 5.39% higher compared to the rate recorded in October 2021 (18.34%). The rise in food inflation was caused by increases in prices of Bread and cereals, Food products i.e. potatoes, yams and other tubers, oil and fat.

On a month-on-month basis, the food inflation rate in October was 1.23%, this was a 0.21% decline compared to the rate recorded in September 2022 (1.43%). This decline was attributed to the reduction in prices of some food items like Tubers, Palm oil, Maize, Beans, and Vegetables. The average annual rate of food inflation for the twelve months ending October 2022 was 19.83%, which was a 0.92% point decline from the average annual rate of change recorded in October 2021 (20.75%).

All items less farm produce

The All Items Less Farm Produce or Core inflation, which excludes the prices of volatile agricultural produce stood at 17.76% in October 2022 on a year-on-year basis; up by 4.52% when compared to 13.24% recorded in October 2021.

On a month-on-month basis, the core inflation rate was 0.93% in October 2022. It was 1.59% in September 2022.

The highest increases were recorded in prices of Gas, Liquid fuel, Passenger transport by Air, Solid fuel, and vehicles spare parts.

The average 12-month annual inflation rate was 15.31% for the twelve months ending October 2022; this was 2.59% points higher than the 12.73% recorded in October 2021.

State profiles

In analysing price movements under this section, it should be noted that CPI is weighted by consumption expenditure patterns which differ across states and locations. Accordingly, the weight assigned to a particular food or non-food item may differ from state to state making interstate comparisons of consumption baskets inadvisable and potentially misleading.

All items inflation

In October 2022, all items inflation rate on a year-on-year basis was highest in Kogi (25.15%), Bauchi (23.45%), Ondo (23.45%), while Plateau (19.02%), Borno (19.31%) and Nasarawa (19.39%) recorded the slowest rise in headline Year-on-Year inflation.

On a month-on-month basis, however, October 2022, recorded the highest increases in Abuja (3.18%), Kebbi (2.80%), Sokoto (2.57%), while Kwara (-0.14%), Kogi (0.06%) and Oyo (0.30%) recorded the slowest rise on month-on-month inflation.

Food price rise

In October 2022, food inflation on a year-on-year basis was highest in Kwara (30.79%), Kogi (28.74%) and Imo (28.64%), while Kaduna (19.96%), Plateau (20.17%) and Jigawa (20.42%) recorded the slowest rise in year-on-year food inflation.

On a month-on-month basis, however, October 2022 food inflation was highest in Sokoto (3.55%), Yobe (3.31%) and Kebi (3.16%), while Kwara (-0.76%), Kogi (-0.55%) and Akwa Ibom (-0.21%) recorded the slowest rise on month-on-month inflation.

Reactions

For economist Gospel Obele, the country’s inflation may likely get worse in the coming months. He said the nation’s economic situation calls for an emergency solution. He disclosed that the flooding in Nigeria, announcement of Naira re-design, forthcoming 2023 election are factors influencing the inflation figure.

“Supply will be further disrupted because farms, farmlands have been flooded in some parts of Nigeria, Christmas and elections are around the corner, Naira redesign will further reinforce inflation to perform worse into next quarter of 2023. There is the likelihood that there is going to be a further increase of the inflation rate.

“My concern is for the average Nigerian who is faced with an increased potential of a poverty trap and high cost of living crisis daily. I think Nigeria needs to act right now because we are in a state of emergency in terms of thinking through unstructured bases, not policy based solutions only. Policies will only pass the problem but won’t deal with the problem. We should look for a more collective approach to fixing the problem,” he said.

The latest inflation figures experts have said would plunge ordinary Nigerians and the average income earners into a poverty trap and economic misery.

The executive director, Nigerian Workforce Strategy and Enlightenment Centre (NIWOSEC), Dr. David Ehindero, said the situation is getting worse by the day.

According to him, in this harvest season, commodities like beans and flour are supposed to naturally depreciate in the market because of supply power by farmers, but the reverse is the case.

He said, “Have you seen the price of pepper, spaghetti, noodles and Garri (cassava flake)? Garri, which used to be regarded as poor man’s food, is now gold; a crate of eggs costs almost N2, 000 and an average loaf of bread goes for about N500.

“One single bell pepper now sells for N200. Five litres of groundnut oil is now over N6000; as for palm oil, anything you see, you take it like that.

“But the most fantastic increase has come from frozen foods like chicken, turkey, fish and the like; these are classified as rich-man’s foods now. A kilogram of chicken and turkey is now almost N2, 500; no matter how you cut it, you can never get up to 10 pieces.”

Enhindero stressed that during the festive period, many families would not be able to have food on the table because of the skyrocketed inflation at 21.09 per cent.

Speaking with Blueprint Weekend via telephone, a psychologist, Christopher Orisemeke, said the rate of increase of goods and services was troubling.

According to him, the rate of increase of goods and services is making it very difficult for salary earners as their wages have not changed.

Christopher, who spoke from Oleh town in Delta state, said: “A bag of rice in Oleh is now N50, 000. And from the way it is going, the price might still increase before Christmas. Even garri that used to be cheap is now beyond the reach of many families. Only God will help us.”