The cost of living has escalated in states with high insecurity threats and disruptions, as inflation rate increases as high as 15.7 per cent, Bismarck Rewane, chief executive officer of Financial Derivatives Company (FDC) Limited has said.
A report by the FDC said, inflation was highest in Kebbi states at 15.7 per cent, 14.97 per cent in Bauchi and 13.74 in Kaduna.
In addition, the report said, the average diesel price in these three states was sold at N231.84 per liter, about 0.5 per cent higher than the average diesel price ofN230.67 per litre.
The implication of a higher diesel price is that the cost of production for local manufacturers in these states are higher, and the cost is subsequently passed on to the consumers, thus fueling higher prices of goods and commodities.
On the other hand, relatively peaceful states recorded lowest inflation in the country. For instance, Kwara state, with the lowest inflation rate stood at 8.45 per cent. Cross River followed with am inflation rate of 9.68 per cent and Abia with an inflation rate of9.91 per cent.
Inflation generally, was driven by the prices of food, the most common factor among Nigerians. Food inflation accelerated to 13.79 per cent in May.
The year-on-year and month-on-month food price indices increased by 0.09 per cent and 0.27 per cent to 13.79 per cent and 1.41 per cent respectively in the month of May. Apart from insecurity, this is a reflection of the planting season effects. The commodities that recorded the highest increase in prices were: bread and cere- als, meat, fish, milk, cheese and egg, potatoes, yam and other tubers, oils and fats, vegetables.
It will be recalled that, because of the problem of insecurity, a lot of farm lands have been destroyed and farmers forced to abandon their farm lands.
Aside from insecurity, other variables conspired together to make Nigeria’s inflation rate accelerate more than any country in Sub Saharan African (SSA).
Rewane said, “with the exception of Nigeria, all the Sub-Saharan African (SSA) countries under our review recorded declines in inflation. At the last MPC meeting, most of these SSA countries left their monetary policy rate unchanged”.
Even though the rise in the headline inflation was marginal, the sharp increase in the monthly general price level suggests that inflationary pressures are intensifying.
“Hence, we expect the rising inflation trend to be sustained in coming months. This would be driven by factors including the planting season and minimum wage implementation. This would be one of the major considerations at the next MPC meeting in July. The committee is likely to be more aggressive in its policy response”, said the FDC report.
The month-on-month inflation (a better reflection of current prices and inflation expectations) was up 17 basis points (bps) to 1.11 per cent 14.23 per cent annualized) in the month of May. This is the third consecutive monthly increase and the sharpest rise in 2019, due to higher monthly food and core inflation. Rising monthly general price level suggests that inflationary pressures loom especially with the minimum wage implementation.
