Higher Food and energy Prices Pushed Inflation to 29.90% in January

The Consumer Price Index (CPI), which measures the rate of change in prices of goods and commodities, rose to 29.90 per cent in January, compared to 28.92 per cent in the preceding month, the National Bureau of Statistics (NBS) said yesterday.

Year-on-year headline inflation was 8.08 per cent higher, compared to 21.82 per cent in January 2023.The CPI report for the month under review indicated that food inflation rate increased by 11.10 per cent year-on-year to 35.41 per cent, compared to 24.32 per cent in January 2023.The rise in the food index was attributed to increases in prices of bread and cereals, potatoes, yam and other tubers, oil and fat, fish, meat, fruit, coffee, tea, and cocoa

On the other hand, core inflation, which excludes the prices of volatile agricultural produces and energy, also rose by 4.71 per cent to 23.59 per cent year-on-year, compared to 18.88 per cent in January 2023.

Core inflation was driven by the highest increases in prices of passenger transport by road, medical services, actual and imputed rentals for housing, pharmaceutical products, accommodation services, and passenger transport by air, among others.

Year-on-year, urban inflation increased by 9.40 per cent to 31.95 per cent, compared to 22.55 per cent in January 2023, while month-on-month, the index rose by 0.30 per cent to 2.72 per cent in January, compared to 2.42 per cent in December

The corresponding 12-month average for the urban inflation rate was 27.01 per cent in January, compared to 19.91 per cent in January 2023.On the other hand, rural inflation increased by 6.97 per cent to 28.10 per cent, year-on-year, compared to 21.13 per cent in January 2023.Month-on-month, the rural index rose by 0.40 per cent to 2.57 per cent, compared to 2.17 per cent in the preceding month.

The corresponding 12-month average for the rural inflation was 23.85 per cent in January, compared to 18.84 per cent in January 2023.At the state level, however, general inflation year-on-year was highest in Kogi (35.79 per cent), followed by Oyo (34.58 per cent), and Akwa Ibom (33.16 per cent), while Borno (22.57 per cent), Taraba (24.83 per cent) and Benue (26.64 per cent) recorded the slowest rise in headline inflation

On a month-on-month basis, however, the highest price increases were recorded in Ondo (3.79 per cent), Osun (3.77 per cent), Jigawa (3.58 per cent), while Bayelsa was (0.45 per cent), Yobe (1.10 per cent), and Ogun (1.35 per cent) recorded the slowest rise.Also, year-on-year, food inflation was highest in Kogi (44.18 per cent), Kwara (40.87 per cent), and Rivers (40.08 per cent), while Bauchi (28.83 per cent), Adamawa (29.80 per cent), and Kano (30.08 per cent) recorded the slowest rise.

Month-on-month basis, food inflation was highest in Ondo (4.69 per cent), Osun (4.59 per cent), and Edo (4.58 per cent), while Bayelsa (0.24 per cent), Yobe (0.97 per cent) and Ogun (1.44 per cent) recorded the slowest rise.Meanwhile, the Centre for the Promotion of Private Enterprise (CPPE) called on government to initiate measures that would ameliorate the negative effect of inflation on manufacturers and operators in the real sector

CPPE also stated that headline inflation, which rose to an all-time high of 29.9 per cent in January, would accelerate poverty and deteriorate citizens’ welfare, as food inflation went up to 35.4 per cent in January, as against 33.9 per cent in December.Commenting on the January inflation, Chief Executive Officer of CPPE, Dr. Muda Yusuf, regretted that the major inflation drivers were not receding, saying that if anything, they have become even more intense.

These drivers, according to him, are depreciating exchange rate, surging transportation costs, logistics challenges, forex market illiquidity, astronomical hike in diesel cost, insecurity in farming communities, and structural bottlenecks to production.Yusuf said, “Elevated inflationary pressures also aggravate pressure on production costs, weaken profitability, erode shareholders value and dampen investors’ confidence

Only very few producers or service providers can transfer cost increases to their consumers. The implication is that manufacturers and other investors are currently under tremendous pressure.“The government needs to review its tariff policies by granting concessionary import duty on intermediate products for agro-allied industries and other industrialists.

“The same is true of investors in logistics sector. The exchange rate benchmark for the computation of import duty should be pegged at N1000/dollar.”According to the group, this is necessary to reduce the pressure of escalating costs of cargo clearing and minimise uncertainty in the international trade processes

Yusuf stated, “The policy choice of complete floating of the naira requires a rethink in the light of the current inflationary outcomes, volatility and market imperfections. The effects of high energy cost on economic activities are profound.“It is very difficult to tame inflation if we do not fix power, logistics and forex issues. Regrettably, there are no quick fixes in these areas. But it is important to prioritise these issues and ensure stability and recovery

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