Nigeria’s inflation rate in the month of June 2022, surged further to 18.6% compared to 17.71% recorded in the previous month. This is according to the recently released CPI report for the month of June 2022, by the National Bureau of Statistics (NBS).
Nigeria’s inflation rate climbed to its highest level in 65 months (over 5 years), and the fifth consecutive monthly rise. The last time the inflation rate in Nigeria touched the 18.6% ceiling was January 2017, when it stood at 18.72%.
On a month-on-month basis, the inflation rate increased to 1.82% in June 2022, this is 0.03% higher than the rate recorded in May 2022 (1.78%). Also, the urban inflation rate increased to 19.09% (year-on-year); this is 0.74% points higher than the 18.35% recorded in June 2021, while the rural inflation rate increased to 18.13% in June 2022 from 17.16% recorded in the corresponding period of 2021.
Food inflation
Food inflation, which is closely watched index also rose to 20.6% in June 2022 from 19.5% recorded in May 2022. The rise in the food index was caused by increases in prices of Bread and cereals, Food products, Potatoes, yam, and other tubers, Meat, Fish, Oil and fat, and Wine.
According to the NBS, the rate of changes in food prices compared to the same period last year was higher due to higher foods prices volatility caused by COVID 19. On a month-on-month basis, the food sub-index increased to 2.05% in June 2022, up by 0.03% points from 2.01% recorded in May 2022.
Core inflation
Also, the core inflation, which excludes the prices of volatile agricultural produce increased to 15.75% in the review month, rising by 0.85% points compared to 14.9% recorded in the previous month.
The highest increases were recorded in prices of Gas, Liquid fuel, Solid fuel, Garments, Passenger transport by road, Cleaning, Repair and Hire of clothing, and passenger travel by Air. On a month-on-month basis, the core sub-index increased to 1.56% in June 2022. This is down by 0.31% when compared to 1.87% recorded in May 2022.
States with the highest inflation rate
In June 2022, all items inflation on a year-on-year basis was highest in Bauchi (21.99%), Kogi (21.37%), Ebonyi (20.73%) while Adamawa (16.14%), Sokoto (16.31%) and Jigawa (16.37%) recorded the slowest rise in headline Year-on-Year inflation.
In terms of food inflation. Kwara State had the highest rise at 25.62%, Kogi (24.81%), and River (24.34%), while Jigawa (16.01%), Sokoto (16.24%) and Kaduna (17.75%) recorded the slowest rise in year-on-year food inflation.
What this means
- Nigeria’s inflation rate has surged to its highest level in over 5 years, largely as a result of the hike in energy and food prices. There was scarcity of petrol in most cities in the country in the review month, leading to a significant rise in transportation costs across the country.
- The uptrend in the inflation rate means that the purchasing power of Nigerians has been further eroded, meaning that for example, one’s N5,000 will not buy the same quantity as it did in the previous month.
- This is further exacerbated by the constant depreciating value of the naira, already trading over N620/$1 at the parallel market and N425/$1 at the official window.
I agree with Samuel Oyekanmi that Nigeria’s inflation rate has surged to its highest level in over five years, primarily due to the energy and food prices hike.
I think this is a direct result of the economic recession that the country is currently facing.
The rise in food and transportation costs has directly impacted the Nigerians’ purchasing power.
Therefore, I believe that the government needs to take steps to address this issue as soon as possible.
One way to do this is by increasing agricultural production to stabilize food prices.
Additionally, the government could also provide subsidies for transportation costs.
These are just some ways the government can help ease the burden on Nigerian citizens.
The number 1 driver of inflation in Nigeria appears to be rising fuel prices from which Nigeria ought to earning more from fuel exports. These are the windfalls that can be used to stabilize prices – of fuel, food – at home through by reducing domestic gasoline excise taxes to lower pump price of fuel in the economy without necessarily reducing fiscal revenue inflows if calibrated right. The second strategy is increasing domestic production of basic staple food grains and vegetables to minimize impact of rising global food prices.