Nigeria’s consumer price index, which measures inflation rose to 11.61% its highest in 17 months, as core inflation drops marginally in October 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 0.37% points, higher than the 11.24% recorded in September and 11.02% for August 2019.
Similarly, food inflation rose to 14.09% compared to 13.51% in the previous month. Meanwhile, Core inflation dropped to 8.88% from 8.94% recorded in September 2019.
The Food Index
In October 2019, food inflation rose to 14.09% from 13.51% recorded in the previous month. The average change of the food sub-index over the 12 months average was 13.54%, which was 0.07% higher than the average annual rate of change (13.47%) recorded in September 2019.
According to the Bureau, the rise in the food index was caused by increases in prices of Meat, Oils and fats, Bread and cereals, Potatoes, yam and other tubers, Fish and Vegetables
On a month-on-month basis, the food sub-index increased by 1.33% in October 2019, up by 0.03% points from 1.30% recorded in September 2019.
Core Inflation
Nigeria’s core inflation, which proxies all items less farm produce, stood at 8.88% in October 2019 as against 8.94% in the previous month. On a month-on-month basis, the core inflation sub-index in October increased -0.15% points slower than the rate recorded in September 2019 0.89%
Details provided by the NBS showed that the highest increases were recorded in prices of Cleaning, Repair and hire of clothing, Hospital services, Major household appliances, Repair of household appliance, Glassware, tableware and household utensils, and Garments.
Rural and Urban Inflation
The report showed that the urban inflation rate increased by 12.20% (year-on-year) in October 2019 from 11.78% recorded in September, while the rural inflation rate increased by 11.07% in October 2019 from 10.77% in September 2019.
On a month-on-month basis, the urban index rose by 1.15% in October 2019, up by 0.02 from 1.13% recorded in September 2019, while the rural index also rose by 0.99% in October 2019, up by 0.03 from the rate recorded in September 2019 0.96%.
Insights
The latest inflation report implies a fast rise in the prices of overall goods and services in the economy. The report showed that Nigeria’s inflation rose to 17 months high, the fastest growth since May 2018.
Basically, the country’s inflation rate which had slowed down to it’s lowest in over 3 years as at August (11.02%) snowballed to 11.61% in October 2019.
The increase in inflation rate may hugely be attributed to the consequences of the sustained closure of the country’s border since August.
• Hence, the rise in inflation suggests that the closure of the land borders is now significantly reflecting 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 rapidly increased.
• It should be noted that the rise in inflation may not necessarily come as a surprise as, prices are expected to rise further due to the recent policy measures by the government.
• An up thick in inflation is still expected through 2019 as the federal government has repeatedly stated it won’t be reversing its stand on the closure of the border until the neighboring countries comply to standards of cross border movement of goods.
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 a fixed income level has worsened within the period.
