Nairametrics| The May 2017 inflation figures released by the National Bureau of Statistics showed that the inflation rate in the country dropped by 0.02% to 17.2%. This drop represents the third consecutive month the inflation rate has tapered down following about 15 consecutive months of soaring inflation rates. Despite this good news, a further review of the report reveals a bit of worrying news. The inflation of food prices rose to 19.3%, up 2% from 19.1% in March 2017.
This rise continues to be baffling considering the decline in Nigerian consumers’ purchasing power as well as the increased availability of foreign currency, which have contributed significantly to the reduction in the headline CPI for 3 consecutive months. These factors, which was expected to reduce prices of food items, has however not done so.
The statistics bureau claims that the rise in the index was caused by increases in prices of bread, cereals, meat, fish, potatoes, yams and other tubers, coffee, tea and cocoa, milk cheese and eggs and oils and fats. In a rather contradictory reading of this data, the National Bureau of Statistics also released its 2017 selected food price watch showing that food prices dropped by -0.94% month on month. Despite this, food inflation month on month increased by 2.04% in April 2017. The last time we observed a decline in food inflation was in January 2017.
So why are food prices galloping?
Nairametrics had earlier reported that analysts had given different reasons for this strange trend. While some opined that the season for agricultural harvest was yet to come, others were of the opinion that the effects of the CBN’s interventions of the CBN would still take some time to manifest.
Others suggest that traders may be intentionally keeping prices high in order to recoup the losses that they suffered last year when the recession really hit hard. Our local food price survey in Lagos also revealed an increase in the price of food items such as yam and plantain, which both form a significant portion of what Nigerians consume. Also, recently, rices of tomatoes have increased i several parts of the country. These all point to one major issue for the economy. Food prices will continue to remain a major drag the hopes of a reduction in the headline inflation rate.
The Federal Government is yet to comment officially on the recent inflation numbers released by the NBS. The monetary policy committee of the CBN meets on Tuesday to deliberate on the economy.