There are indications that Nigeria’s inflation may worsen given the current state of its macroeconomic environment and economic indicators of growth. Recent inflation statistics by the National Bureau of Statistics reveal that year-on-year headline inflation edged upwards to 9.3 per cent in August, from 9.2 per cent in June and July, 2015.
The increase in headline inflation in the month of August reflected marginal increases in both the core and food components of inflation.
According to analysts, this figure may worsen as the Nigerian agricultural sector productivity has been badly affected by floods in parts of the country. Floods have destroyed farm produce such as rice, groundnut, millet, guinea corn and maize worth up to N49 billion.
Due to the nature of these crops, which do not require much water, the damage could not be corrected when the floods submerged farmlands. Floods have destroyed crops in Sokoto, Zamfara with an estimated 626,250 metric tons of rice lost. Also, Kebbi and Jigawa have lost a combined 635,000 hectares of land.
Rice is a staple food in Nigeria and a major contributor to its foreign exchange earnings, and this is sure to affect the supply of the food commodity on both the local and international markets. Consequently, given the Godwin Emefiele-led Central Bank of Nigeria’s import ban on 41 items including rice, to restrict forex access, this will lead to a spike in cost of rice and in turn inflation—which the CBN tries to manage.
