The general rise in prices of goods and services in Nigeria’s market place, inflation rate, has increased from 11.98 per cent in December 2019 to 12.13 per cent in January 2020. This is the highest rate recorded in the country since May 2018, which was 11.61 per cent. According to the NBS report, month on month, inflation rose by 12.13 per cent in January, higher than the rate (11.98%) recorded in December 2019 and 11.85 per cent in November 2019.
Afrinvest in a flash note to investors said “The broad-based rise in inflation reflects renewed price pressures as all indices rose faster on a M-o-M basis, for the first time since September 2019. However, the uptrend in January is unlikely to be short-lived. We believe the land border closure, insecurity in food planting regions and the upward review of VAT would drive inflation higher in the coming months. If these persist, combined with the proposed adjustment to electricity tariff in April, we expect inflation to reach a monthly average of 13.7% in 2020 from 11.4% in 2019”.
Food component of the inflation index rose by 14.85 per cent in January 2020 compared to 14.67 per cent recorded in December 2019. On a month-on-month basis, the food sub-index rose by 0.99 per cent in January 2020, up by 0.02 per cent points from 0.97% recorded in December 2019. The average annual rate of change of the food sub-index for the twelve-month period ending January 2020 was 13.86% from December 2019 (13.74%). According to the report, the rise in the food index was caused by increases in prices of bread and cereals, meat, oils and fats, potatoes, yam and other tubers and fish. The ”All items less farm produce” or core inflation, which excludes the prices of volatile agricultural produce, rose to 9.35 per cent in January 2020, up by 0.02 per cent when compared with 9.33 per cent recorded in December 2019.
On a month-on-month basis, the core sub-index increased by 0.82 per cent in January 2020. This was up by 0.01 per cent when compared with 0.81% recorded in December 2019. Also, the average 12-month annual rate of change of the index was 9.11% for the twelve-month period ending January 2020. This is 0.04 per cent lower than 9.15% recorded in December 2019.
The report showed that core inflation was driven by increase recorded in prices of hospital services, vehicle spare parts, cleaning, repair and hire of clothing, shoes and other footwear, glassware, tableware and household utensil, hairdressing salons and personal grooming establishments, repair and hire of footwear, garments, as well as passenger transport by air.
Similarly, the urban inflation rate increased by 12.78% (year-on-year) in January 2020 from 12.62% recorded in December 2019 while the rural inflation rate increased by 11.54% in January 2020 from 11.41% recorded in December 2019. On a month-on-month basis, the urban index rose by 0.92% in January 2020, up from 0.9% recorded in the previous month, while the rural index also rose by 0.83% in January 2020, from 0.82% recorded in December 2019. The latest inflation report implies a fast rise in the prices of overall goods and services in the economy. The report showed that Nigeria’s inflation rose to 21 months high, the fastest growth recorded since May 2018.