Some economists have said the recent spike in inflation rate after months of consistent decline may have been triggered by the higher-than-expected household consumption during the Christmas festivities.
The National Bureau of Statistics released Nigeria’s inflation figures for the month of December 2021 on Monday, which to the surprise of many analysts, was an uptick compared to the previous month despite recording steady declines in 8 successive months.
Specifically, according to the NBS, Nigeria’s consumer price index rose by 15.63 percent year-on-year in December 2021, compared to the rate of increase recorded in the preceding month (November 2021 – 15.4%).
Reacting, Head of Research and Intelligence at Phillips Consulting Limited, Samuel Bamidele, said while the high-base effect of inflation decline has weaned, the December spike must have been triggered by higher-than-expected household consumption spending during the festive period.
“According to the report, food inflation is the driver, with a 2.19% month on month increase, the highest since May 2017. The question that needs answering is what factors drove food inflation apart from demand? Without recycling the known factors, let’s wait for the January digit, and the picture will become clearer,” he added.
Meanwhile, Bamidele projects that Nigeria’s inflation will remain on the upside in the year. “Three major factors that will potentially shape prices in the year are the potential subsidy removal which will trigger fuel hike, electricity hike and the import pass through other FX adjustments.”
Also reacting, a financial analyst at Quantum Economics, Olumide Adesina, argued that the mid-term impact of such metrics would continually erode the purchasing power of Nigeria’s most vulnerable households and hinder Nigeria’s economic recovery.
On the other hand, Uche Nwachukwu, an investment analyst with one of the investment houses in Nigeria confirmed that it was a surprise to have seen the inflation figures rise in December.
