Inflation rate at 21.09% pushed by flooding, higher energy and travel costs
By Jeph Ajobaju, Chief Copy Editor
Inflation jumped to 21.09 per cent in October, the National Bureau of Statistics (NBS) has announced, but financial analysts warn the rate could reach 21.5 per cent in November, riding on flooding and higher energy costs.
The impact of flooding in several food producing states also couples with depreciating naira and rising fares in all modes of transport – air, land, and water.
NBS Consumer Price Index (CPI) for October 2022 said inflation rose 0.32 percentage point from 20.77 per cent in September, the highest in 17 years and 11th consecutive month-on- month (MoM) increase.
Food inflation grew from 23.34 per cent in October 2021 to 23.72 per cent in October 2022, spurred by increases in the prices of food items.
“The food inflation rate in October 2022 was 23.72 percent on a year-on-year basis; which was 5.39 percent higher compared to the rate recorded in October 2021 (18.34 percent).
“The rise in food inflation was caused by increases in prices of bread and cereals, food products n.e.c, potatoes, yams and other tubers, oil and fat,” the NBS said.
“On a month-on-month basis, the food inflation rate in October was 1.23 percent, this was a 0.21 percent decline compared to the rate recorded in September 2022 (1.43 percent).
“This decline was attributed to the reduction in prices of some food items like tubers, palm oil, maize, beans, and vegetables.”
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Taming inflation
To rein in inflation, analysts at Cowry Assets Management expect around 25 basis points rise in Monetary Policy Rate (MPR) at the next meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
“Our headline inflation outlook remains elevated when we take into account the recent flooding which affected many food producing states; the rise in energy costs which is reflective of the increases in fuel prices (diesel and kerosene) coupled with the depreciating naira and rising airfare prices,” they said, per The PUNCH.
“For the MPC, there is little room for another rate tweak at its next meeting on Monday and Tuesday after an already 400bps rate hike this year in the bid to tame inflationary pressure, following this marginal acceleration.
“Thus, we expect a moderate rate hike at the next MPC meeting by around 25 basis points. That being said, we project headline inflation to hit 21.5 percent in November.”