Nigeria’s consumer price index, which measures inflation increased to 11.24% in September 2019. This was disclosed in the latest inflation report released by the National Bureau of Statistics (NBS).
According to the NBS report, inflation rose by 0.22% points, higher than the 11.02% recorded in August and 11.08% for July 2019.
Similarly, food inflation rose to 13.51% compared to 13.17% in the previous month. Also, Core inflation rose to 8.94% from 8.68% recorded in August 2019.
The Food Index
In September 2019, food inflation rose to 13.51% from 13.17% recorded in the previous month. The average change of the food sub-index over the 12 months average was 13.47%, which was 0.01% higher than the average annual rate of change (13.46%) recorded in August 2019.
According to the Bureau, the rise in the food index was caused by increases in prices of bread and cereals, oils and fats, meat, potatoes, yam and other tubers, fish and vegetables.
On a month-on-month basis, the food sub-index increased by 1.30% in September 2019, up by 0.08% points from 1.26% recorded in August 2019.
Nigeria’s core inflation, which proxies all items less farm produce, stood at 8.94% in September 2019 as against 8.94%. On a month-on-month basis, the core inflation sub-index increased by 0.89% from 0.67% recorded in August.
Details provided by the NBS showed that the highest increases were recorded in prices of cleaning, repair and hire of clothing, repair of household appliance, hospital services, major household appliances, glassware, tableware and household utensils, spirits, clothing materials, other articles of clothing accessories, garment and repair and hire of footwear.
Rural and Urban Inflation
The report showed that the urban inflation rate increased by 11.78% (year-on-year) in September 2019 from 11.48% recorded in August, while the rural inflation rate increased by 10.77% in September 2019 from 10.61% in August 2019.
On a month-on-month basis, the urban index rose by 1.13% in September 2019, up by 0.09 from 1.04% recorded in August 2019, while the rural index also rose by 0.96% in September 2019, up by 0.03 from the rate recorded in August 2019 0.93%.
The latest inflation report implies a fast rise in the prices of overall goods and services in the economy. According to the latest inflation report, it showed that Nigeria’s inflation rose to three months high.
Basically, the country’s inflation rate had dropped from 11.40% in May to 11.02% recorded in August 2019. The drop in inflation rate in August represented the slowest inflation rate recorded in over three years.
- Meanwhile, the NBS noted in its August inflation report that the border closure had not started to reflect on the economy as the border was only closed on 20th August 2019 with only 11 days of 31days
- Hence, the rise in inflation suggests that the significant impact of border closure has started to reflect on commodity prices.
- Recall that since the border closure, Nairametrics reported that prices of food items like rice, frozen chicken, tomatoes and other food items had snowballed.
- The rise in inflation may not necessarily come as a surprise as analysts expected the rise due to the recent policy measures which include complete closure of the Nigerian land borders.
In the meantime, the latest increase in the inflation rate means the purchasing power of consumers to buy goods and services deteriorated. That is, the ability of consumers to buy the same quantity of goods with the same income level has worsened.
While this affects the consumers, firms producing consumer goods and other services may also witness a slowdown in inventory, as demand is expected to drop, which may affect revenues generated overtime.