Effects of devaluation creeps in as Inflation rate jumps to 8.4%

The National Bureau of Statistics has released its February Consumer Price Index (CPI) report which measures inflation confirming inflation rose by 8.4 percent (year-on-year), 0.2 percentage points from 8.2 percent recorded in January.

It also confirms all major COMPOSITION OF THE MAJOR INDEX AND SUB-INDICES (CIOCOP) divisions that contribute to the index increased at a faster pace during the period, the only exception being Recreational and Culture Division which increased at a slower pace. The faster pace in Divisions that yield the Headline Index was also evidenced in both the Food and Core sub-indices.

Food prices as observed by the Food Sub-index increased at a faster pace in February partly driven by increases in prices of imported food items. The Imported Food sub-index increased by 8.8 percent (year-on-year), the highest increase recorded since February 2013. The Food sub-index rose by 9.4 percent (year-on-year), 0.2 percentage points from January. By groups, while most groups that contribute to the Food sub-index increased at a faster pace during the month, the pace of increase in the Food Sub-index was weighed upon by a slower increase in the Bread and Cereals group.

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Further analysis of the report suggest the effect of devaluation of the Naira has finally crept into prices of goods and services going by how much most imported items rose. For example,  the pace of increases in the “All items less Farm Produce” or Core index, which excludes the prices of volatile agricultural produce strengthened further in February.

Prices rose by 7.0 percent (year-on year), up from 6.8 percent in January with the strongest increases recorded in the “Furnishings & Household Equipment Maintenance” and “Restaurant &  Hotels” divisions On a month-on-month basis, the Core Sub-index increased at the same pace for the second consecutive month at 0.7 percent.  The highest increases were recorded in the “Appliances, articles and products for personal care”, and “Fuels and lubricants for personal transport equipment” groups amongst others. Constituents of these items are mostly imported suggesting that further increase in inflation rate ,ay continue to be recorded in the coming months.