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Economy & Politics
Nigeria’s inflation rate jumps to 14.23% in October 2020
Nigeria’s inflation rate rose by 14.23% in October 2020 as against 13.71% recorded in September 2020
Nigeria’s inflation rate rose by 14.23% (year-on-year) in October 2020 as against 13.71% recorded in September 2020. This was contained in the consumer price index report, recently released by the National Bureau of Statistics (NBS).
According to the report, the October figures indicates a persistent increase in 14 months and the highest recorded since March 2018. Also, on a month-on-month basis, the Headline index increased by 1.54% in October 2020, this is 0.06% rate higher than the rate recorded in September 2020 (1.48%).
READ: Nigeria’s inflation rate jumps to 12.82%, highest in 27 months
Food inflation
The composite food index, a closely watched component rose by 17.38% in October 2020 compared to 16.66% recorded in September 2020. On month-on-month basis, the food sub-index increased by 1.96% in October 2020, up by 0.08% points from 1.88% recorded in September 2020.
The major drivers of food inflation were increases recorded in the prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fish, Fruits, Vegetable, alcoholic and food beverages and Oils and Fats.
READ: A summer of higher food prices, limited room for monetary policy
Core inflation
The “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce stood at 11.14% in October 2020, up by 0.56% when compared with 10.58% recorded in September 2020.
The highest increases were recorded in prices of Passenger transport by air, Hospital and Medical services, Passenger transport by road, Pharmaceutical products, Motor cars, Vehicle spare parts, maintenance and repair of personal transport equipment, Hairdressing salons and personal grooming establishments, Miscellaneous services relating to the dwelling, Paramedical services and shoes and other footwear.
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States with highest inflation
Zamfara State recorded the highest rate in the month of October with a 17.69% increase (year-on-year), followed by Sokoto State (17%), Ebonyi (16.91%), Bauchi (16.73%), and Plateau State (16.69%). On the flip side, Cross River recorded 11.5%, followed by the federal capital, Abuja (11.84%), Lagos (11.95%), Ondo (12.33%) and Kwara State (12.5%).
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In terms of the food index, Edo State led the list with 21.65% followed by Zamfara (20.88%), Kogi (20.58%), Sokoto (20.5%), and Plateau State (20.26%) while Ondo State recorded the lowest inflation rate with 14.23% followed by Ogun, Lagos, Bauchi and Gombe with 14.47%, 14.57%, 14.85% and 14.88% respectively.
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What this means
The rise in inflationary pressure indicates a persistent decrease in the purchasing power of consumers especially at a time when the economy is on the verge of recession, characterised by increases in price of major food items and service fees.
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IMF lifts 2021 global GDP growth to 6%
The group also warned that economic recoveries are diverging dangerously across and within countries.
The International Monetary Fund has lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic. This disclosure was made on the organisation’s website on Tuesday.
The group also warned that economic recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well.
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What the IMF is saying
“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year.
This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic.
China is projected to grow this year at 8.4 percent. While China’s economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”
READ: Nigeria needs structural and monetary policy reforms to unlock potential – IMF
On divergent recoveries
The IMF stated that divergent recovery paths are likely to create wider gaps in living standards across countries compared to pre-pandemic expectations.
“The average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, is projected to be 5.7 percent in low-income countries and 4.7 percent in emerging markets, while in advanced economies the losses are expected to be smaller at 2.3 percent,” they said.
“Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multispeed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways.“
For Africa, IMF forecasts economic growth of 3.4% in 2021 and 4% by 2022, Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.
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In case you missed it
The International Monetary Fund (IMF) identified some factors that hamper the economic recovery of low-income countries from the devastating impact of the coronavirus pandemic, factors including access to vaccines, limited policy space to respond to the crisis, the lack of means for extra spending, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries. These factors continue to act as a drag on growth.
