Inflation rate in Nigeria, on Monday, surged to a six-year-high to 13.7 percent, accelerating for a sixth consecutive month in April and at the highest pace since August 2010, the Nigerian Bureau of Statistics (NBS) has said.
According to the NBS report, the persistent increase is due to rising petrol and electricity prices.
The Bureau noted that lingering structural constraints continued to manifest spillovers in the month under review as electricity rates, kerosene prices, the impact of higher PMS prices and vehicle spare parts contributed largest to the Core Sub index during the month.
The Consumer Price Index (CPI), which measure rate of inflation in the economy, rose by 0.9 percent in April from 12.8 per cent rates recorded in March, while food sub-index jumped by 0.4 per cent points from rates recorded in March.
The CPI measures the average change over time in prices of goods and services consumed by people on daily basis.
“The Headline index increased by 13.7% (year-on-year), roughly 0.9% points higher from rates recorded in March (12.8%),” NBS said in the report.
“The higher rate of increase relative to March, was reflected in faster increases across all divisions which contribute to the index with the exception of the Restaurants and Hotels division which increased, albeit at a slower pace for the third consecutive month.
“Lingering structural constraints continue to manifest spill overs in April as electricity rates, Kerosene prices, the impact of higher PMS prices and Vehicle Spare Parts were the largest contributors to the Core Sub index during the month.
“These items as well as other imported items continued to have ripple effects across many divisions that contribute to the Core. The index increased by 13.4% in March, roughly 1.2% points from rates recorded in March.”
The Central bank of Nigeria (CBN) last year, pegged the naira at 197-199 per dollar and restricted trading in foreign currencies, making imports more costly for a nation that’s a net importer of food and refined fuel. Africa’s largest economy imports at least 70 percent of its refined fuel, despite pumping 1.4 million barrels of crude a day, and faces fuel shortages.
The minister of state for petroleum, Ibe Kachikwu, last week increased the price of Premium Motor Spirit, otherwise known as petrol by 67 percent to 145 naira ($0.73) per liter (0.26 gallon). He said increasing the price could help ease shortages across the country, which were partly caused by the continuous fall in the value of the naira, with Importers struggling to access foreign exchange at the official rate, with the naira falling to about 360 per dollar on the black market.
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However, the inflationary rate is likely to get worse at the end of May, accelerating to a seven month high, following reports that the NBS report was compiled before the hike in the pump price of petrol.
Nigeria’s economy was hit with a double digit inflation in February at 11.38 percent, rising to 12.77 in March and 13.72 in April. Indications show the rate is likely going to hit 20 percent before January 2017.
We will have to wait for the next CBN’s monetary policy committee (MPC) meeting slated for May 24. In March, the apex bank tightened monetary policy, raising the benchmark interest rate to 12 percent from 11 percent to try to curb the galloping inflation.