Olusola Bello
Nigeria’s headline inflation rose to 15.63 percent in December 2021, after an eight-month decline, According to a report made available by the National Bureau of Statistics.
This indicates an increase of 0.23 percentage points or 23 basis points over its closing value in November of 2021 when it closed at 15.40%.
According to the report, on a year-on-year basis, the new figure is a reduction of 0.12 percentage points when compared to 15.75% in the same month of 2020.
Nigeria’s inflation rate had been on a steady decline in the past 8 months since April 2021, moderating from the highs recorded in the previous year. However, the rate had just back-pedaled with an uptick in December 2021.
On a month-on-month basis, the headline index increased by 1.82% in December 2021, this is 0.74% points higher than the rate recorded in November 2021 (1.08%).
Meanwhile, the urban inflation rate increased by 16.17% (year-on-year) in December 2021 from 16.33% recorded in December 2020, while the rural inflation rate increased by 15.11% in December 2021 from 15.20% in December 2020.
Food inflation
Food inflation, which accounts for all volatile agricultural produce increased by 0.16% points to 17.37% in December 2021 compared to 17.21% recorded in the previous month.
On a month-on-month basis, the food sub-index increased by 2.19% in December 2021, up by 1.12% points from 1.07% recorded in November 2021.
The Bureau noted that this rise in the food sub-index was caused by increases in prices of bread and cereals, food product, meat, fish, potatoes, yam and other tubers, soft drinks and fruit.
The average annual rate of change of the food sub-index for the twelve-month period ending December 2021 over the previous twelve-month average was 20.4%, 0.22% points lower from the average annual rate of change recorded in November 2021 (20.62%).
Core inflation
The “All items less farm produce’’ or Core inflation, which excludes the prices of volatile agricultural produce stood at 13.87% in December 2021, up by 2.50 percent when compared with 11.37% recorded in December 2020.
On a month-on-month basis, the core sub-index increased by 1.12% in December 2021. This was down by 0.13$ when compared with 1.26% recorded in November 2021.
On the other hand, the highest increases were recorded in prices of gas, liquid fuel, wine, actual and imputed rentals for housing, narcotics, tobacco, spirit, cleaning, repair and hire of clothing, garments, shoes and other footwear and clothing materials, other articles of clothing and clothing accessories.
States with highest inflation
In December 2021, all items inflation on a year-on-year basis was highest in Ebonyi (18.71%), Kogi (18.37%), and Bauchi (17.81%), while Kwara (12.32, Edo (13.46%) and Cross River (13.93%) recorded the slowest rise in headline Year on Year inflation.
In December 2021, food inflation on a year-on-year basis was highest in Kogi, (22.82%), Enugu (20.65%) and Lagos (20.27%), while Edo (13.24%), Kaduna (13.53%) and Sokoto (14.82%) recorded the slowest rise.
To reduce the current inflationary pressure, experts have suggested that government needs to fix the following: Reform the foreign exchange market to stabilise the exchange rate and reduce volatility. Address forex liquidity issues through appropriate policy measures.
They also advised the government to address the security concerns causing disruption to agricultural activities. Address productivity issues in the real sector of the economy and address the challenge of high transportation costs.
Reduce fiscal deficit financing by the CBN to minimise the incidence of high-powered money in the economy. Manage climate change consequences to reduce flooding and desertification.
He also called for the restoration of normalcy and good order at the nation’s ports to reduce transaction costs. Reduce import duty on intermediate products and raw materials for industries to reduce production costs, especially in the light of the sharp depreciation in the exchange rate.
