The National Bureau of Statistics has released its April Consumer Price Index revealing that inflation rate for the month was 13.7%. According to the Bureau, The Headline index increased by 13.7% (year-on-year), roughly 0.9% points higher from rates recorded in March (12.8%).
The higher rate of increase relative to March, was reflected in faster increases across all divisions which contribute to the index with the exception of the Restaurants and Hotels division which increased, albeit at a slower pace for the third consecutive month. This is the third consecutive month of strong increase in the rate of inflation.
Why Inflation Rate Spiked
The Bureau explained the spike as follows;
“Lingering structural constraints continue to manifest spill overs in April as Electricity rates, Kerosene prices, the impact of higher PMS prices and Vehicle Spare Parts were the largest contributors to the Core Sub index during the month. These items as well as other imported items continued to have ripple effects across many divisions that contribute to the Core. The index increased by 13.4% in March, roughly 1.2% points from rates recorded in March.
The Food index reflected tighter supplies across most groups that contribute to the subindex. The subindex increased by 13.2% in April, up by 0.4% points from rates recorded in March as all major food groups which contribute to the Food sub- index increased at a faster pace driven by higher food prices in Fish, Bread and Cereals, and Vegetables groups.
Month-on-month, while the Headline Index increased in April, the index slowed for the second consecutive month. The index increased by 1.6%, in April, 0.6% points from rates recorded in March. All divisions which contribute to the index increased at a slower pace, during the month with the exception of the Housing Water, Electricity, Gas & Other Fuel division.
Year on year, both the Urban and Rural indices recorded marked increases for the third consecutive month in March. The Urban index rose by 15.1%, 1.6% points from 13.5% in March. While the Rural Index increased, upward pressure on prices were relatively less severe in the rural areas as the index increased 12.8% year-on-year, 0.7% points from 12.0% in March. On a month-on-month basis, while the Urban index increased at a faster pace, from 2.0% in March to 2.2% in April, the Rural index increased at a slower pace, from 2.1% in March to 1.4% in April.
The percentage change in the average composite CPI for the twelve- month period ending in April 2016 over the average of the CPI for the previous twelve-month period was 10.2%, higher from 9.8% recorded in February. The corresponding twelve- month year-on-year average percentage change for the Urban index increased from 9.9% in March to 10.5% in March, while the corresponding Rural index also increased from 9.6% in March to 9.9% in April.
Inflation is predicted to spike even further in May as the effect of the fuel deregulation and the imminent devaluation takes effect on the economy.
