Article Summary
- Nigeria’s headline inflation rate rose to 22.22% in April 2023, the highest rate in 17 years.
- Food inflation increased to 24.61% YoY, with prices of various food items increasing.
- Despite multiple interest rate hikes by the central bank, inflation continues to rise, with the core inflation rate standing at 20.14% in April 2023.
Nigeria’s headline inflation rate rose to 22.22% in April 2023, a 0.18% point higher than the 22.04% recorded in the previous month.
According to the latest Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS), Nigeria’s inflation rate has increased for the fourth consecutive month, maintaining the highest rate in 17 years. Compared to the corresponding period of 2022, inflation increased by 5.4% from 16.82% recorded in April 2022.
On a month-on-month basis, the All-Items Index in April 2023 was 1.91%, which was 0.05% points higher than the rate recorded in March 2023 (1.86%). This means that in April 2023, on average, the general price level was 0.05% higher relative to March 2023.
Nigeria’s inflation rate continues its uptrend despite multiple interest rate hikes by the central bank to tame the rising rate. The CBN has increased Monetary Policy Rate (MPR) from 11.5% to 18% between May last year and March 2023.
Food inflation
The food inflation rate in April 2023 was 24.61% on a year-on-year basis, which was 6.24% points higher compared to the rate recorded in April 2022 (18.37%) and 24.35% recorded in the previous month.
The rise in food inflation on a year-on-year basis was caused by increases in prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, and Spirits.
The “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce, stood at 20.14% in April 2023 on a year-on-year basis. This shows that it was up by 5.96% when compared to the 14.18% recorded in April 2022. It is also higher than the 19.86% recorded in March 2023.
More drivers of inflation
The highest increases were recorded in prices of gas, air transport, liquid fuel, vehicle spare parts, fuels, and lubricants for personal transport equipment, medical services, and road transport.
The contributions of items on the divisional level to the increase in the headline index are; food and non-alcoholic beverages (11.51%), housing water, electricity, gas and other fuel (3.72%), clothing and footwear (1.7%), and transport (1.45%).
State inflation
During the month under review, all items inflation rate (on a year-on-year basis) was highest in Bayelsa (26.14%), Kogi (25.57%), and Rivers (24.95%). On the flip side, Borno (19.06%), Taraba (19.64%) and Sokoto (19.90%) recorded the slowest rise in headline inflation on a year-on-year basis.
On a month-on-month basis, however, April 2023 recorded the highest increases in Cross River (3.05%), Bayelsa (2.92%), Rivers (2.62%), while Katsina (0.52%), Jigawa (0.74%) and Osun (0.96%) recorded the slowest rise on.
In terms of food inflation on a year-on-year basis, it was highest in Kogi (29.50%), Kwara (29.48%), and Bayelsa (29.38%), while Sokoto (19.55%), Taraba (20.20%) and Jigawa (20.68%) recorded the slowest rise.
What this means
- Nigeria continues to suffer increasing inflation numbers, defying the contractionary monetary stance of the CBN. Inflation has jumped by 652 basis points between February 2022 to date, moving in tandem with interest rates.
- Between May 2022 and March 2023, interest rates have been increased by 650 basis points to 18% from 11.5%. This is yet to weaken the pace of inflation in the country.
- The surge in energy prices, coupled with exchange rate volatility and a severe cash crunch have contributed to the rising rate of inflation in the country, which has remained unabated. The inflation rate rose to its highest level since September 2005 despite multiple interest rate hikes by the apex bank.
- The rising inflationary pressure indicates a worsening erosion of Nigerians’ purchasing power.