AS Nigeria’s unemployment rate continues to rise, its inflation rate has jumped to 17.33 percent (year-on-year) in February 2021, indicating the highest level in four years, the Consumer Price Index (CPI) of February 2021 has shown.
Inflation in Nigeria has consistently been on the increase for 12 months, rising from 12.2 percent in February 2020 to 17.33 percent in February 2021, the report released by the National Bureau of Statistics (NBS) on Tuesday shows.
Food for the increasing number of poor Nigerians is not getting cheaper. The report revealed that food inflation increased to 21.79 percent, the highest point since the 2009 data series.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, food products, fruits, vegetable, fish and oils and fats,” NBS explains.
According to the report, increases were recorded in all 12 Classification of Individual Consumption According by Purpose (COICOP) divisions that yielded the headline index.
The COICOP includes food and non-alcoholic beverages, alcoholic, and beverages, tobacco, and kola, clothing and footwear, housing, water, electricity, and gas; furnishings and household equipment.
Others are health, transport, communication, recreation and culture, education, restaurants and hotels, miscellaneous goods and services.
The NBS reported yesterday in its ‘Labour Force Statistics: Unemployment and Underemployment Report’ that about 23.18 million Nigerians were currently unemployed.
The report indicated that the country’s unemployment rate rose to 33 percent in the fourth quarter of 2020, from 27.1 percent recorded in the second quarter of 2020.
Inflation in states
According to the NBS, all-items inflation on year-on-year basis was highest in Kogi at 24.73 percent; Bauchi at 22.92 percent; and Ebonyi at 20.45 percent. In comparison, Enugu at 14.73 percent rate; Kwara, 14.25 percent; and Cross River, 12.97 percent, recorded the slowest rises in year-on-year headline Inflation.
Year-on-year, food inflation was highest in Kogi which reported 30.47 percent inflation rate; Ebonyi, 25.73 percent; and Sokoto, 25.68 percent. In comparison, Gombe (19.32 percent), Bauchi (18.74 percent), and Akwa Ibom (18.70 percent) recorded the slowest rises of year-on-year inflation.
Why Inflation is on the rise
In an earlier report by The ICIR, experts said inflation was on the rise for several reasons. According to Nonso Ihuoma, a finance expert, COVID-19 had dislocated businesses and supply chains while driving up production costs.
“It was easier to get input supplies before COVID-19 struck, but it is becoming a bit difficult now due to COVID-19 measures put in place by many countries. If you were getting your raw materials from the UK or the USA, imagine what happens to you now that they are on lockdowns. That situation will either make you seek expensive alternatives or stop production,” he explained.
Another reason was the preponderance of floods, which hit farmers hard, leading to lower food production and higher prices. Experts also say that Nigeria is also hit by imported inflation, resulting from naira devaluation and exchange rate risks.
In its 2021 economic outlook released recently, the LCCI predicted increases in the inflation rate this year.
“Looking forward into year 2021, we expect headline inflation to remain elevated as the combination of food supply shocks, foreign exchange (FX) policies, higher energy costs, FX illiquidity, heightened insecurity in major food-producing states, will continue to mount pressure on domestic consumer prices,” Muda Yusuf, director-general of the LCCI, noted.
“We believe a broad-based harmonisation of fiscal and monetary policies towards addressing the identified structural constraints will significantly help to moderate inflationary pressure in the medium term,” Yusuf further said.
According to the World Poverty Clock, Nigeria has the highest number of poor people globally, with 89.8 million living in extreme poverty. Also, the country is home to one of the largest unemployment rates globally, with 33.3 percent of its working population out of jobs. An increase in the inflation rate means that cost of living is high and most poor Nigerians lack the purchasing power to feed themselves and their families.