Rising Food Prices Push Inflation to 15.75%
James Emejo in Abuja
The Consumer Price Index, (CPI) which measures inflation increased by 15.75 per cent (year-on-year) in December 2020 compared to 14.48 per cent in November of the same year, according to figures released yesterday by the National Bureau of Statistics (NBS).
According to the CPI figures for December, on month-on-month basis, the headline index increased by 1.61 per cent.
The food inflation rose by 19.56 per cent in December 2020 compared to 18.30 per cent last November.
The increase in the food index was tied to the rise in the prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.
Also, core inflation, which excludes the prices of volatile agricultural produce stood at 11.37 per cent in December, up by 0.32 per cent when compared with 11.05 per cent recorded in November.
According to the NBS, the core index recorded highest increases in prices of passenger transport by air, medical services, hospital services, shoes and other footwear, passenger transport by road, miscellaneous services relating to the dwelling, hairdressing salons and personal grooming establishments, repair of furniture, vehicle spare parts, pharmaceutical products, motor cars, maintenance and repair of personal transport equipment, paramedical services, motor cycle, dental services and bicycles.
The urban inflation rate increased by 16.33 per cent (year-on-year) in the review period from 15.47 per cent recorded in the preceding month while the rural inflation rate increased by 15.20 per cent in December from 14.33 per cent in November.
In the period under review, Edo, Kogi and Sokoto States recorded the highest year on year increase in food inflation with 24.14 per cent, 23.14 per cent and 22.24 per cent respectively.
On the other hand, Bauchi, Abia, and Nasarawa recorded the slowest rise with 16.53 per cent, 16.04 per cent and 15.71 per cent respectively.
According to the statistical agency, on month on month basis however, the December food inflation was highest in Edo 3.68 per cent, Benin 3.48 per cent and Gombe 3.00 per cent, while River 0.93 per cent, Osun 0.59 per cent and Ekiti 0.24 per cent recorded the slowest rise.
Similarly, year on year, in December, core inflation on was highest in Bauchi 19.85 per cent, Edo 18.15 per cent and Kogi 18.40 per cent, while Lagos 14.05 per cent, Kwara 13.91 per cent and Abia 13.30 per cent recorded the slowest rise in headline inflation.
On month on month basis however, December all item inflation was highest in Nasarawa 2.30 per cent, Gombe 2.20 per cent and Akwa Ibom 2.16 per cent while Ekiti 0.87 per cent, Rivers 0.67 per cent and Ebonyi 0.61 per cent recorded the slowest rise in headline inflation.
Analysts at the Financial Derivatives Company Limited, led by foremost economist Bismarck Rewane, had said last week predicted that headline inflation would increase by 0.51 per cent to 15.4 per cent in December, describing it as “a hydra-headed monster that has eroded the disposable and discretionary income of consumers”.
“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs,” they said.
The analysts noted that consumer disposable income had been negatively affected by the hike in electricity tariffs, general reductions in subsidies, and improved tax mobilisation.
“We believe the sustained pressure in the food basket is reflective of the impact of the underwhelming harvest season, persistent security challenges in the food-producing region and festive- induced demand which further widened the demand-supply imbalance,” Cordros Capital Limited said yesterday.