That inflation rate spiked after eight months of successive decline is not a major issue, but that food inflation actually rose meaningfully in midst of a harvest season is a major concern to Bismarck Rewane, Chief Executive Officer (COO) of Financial DerivAtives Company (FDC) Limited and member of the Federal Economic Council (FEC).
“Most of the sub-indices also increased especially core inflation, which spiked to 13.87% and food inflation, which climbed to 17.37 per cent. Prices of the usual suspects (bread, cereals, yam and other tubers) increased. Equally disturbing to policy makers will be the fact that food inflation rose in the midst of the harvest season. Imported inflation also played a major role in pushing prices in the opposite direction”, said Rewane in an FDC publication yesterday.
The December inflation report was released yesterday (Monday) and contrary to our projections (14.9 per cent), headline inflation bucked its 8-month declining trend, rising by 0.23 per cent to 15.63 per cent from 15.4 per cent. The data partially addresses the recent controversy surrounding the contrarian direction of inflation in Nigeria.
As far as he is concerned, all eyes on the Monetary Policy Committee (MPC) meeting next week.
“Most analysts were of the view that the CBN’s MPC will maintain status quo again next week in view of the earlier anticipated declining inflation. The new data now increases the probability of a tightening even though remote at this time. The CBN had maintained status quo 25 times in the last 28 meetings” he said.
According to Nairametrics, in the expert opinion of Olumide Adesina, a financial analyst at Quantum Economics, the surge in Nigeria’s inflation rate was due to the festivities in the month of December. “As a result of the festive season, Nigeria’s inflation rate surged by 230 basis points to 15.63 per cent in December 2021 after 8 consecutive months of decline,” he said.