Average Nigerians risk threat of poverty trap as inflation hits 21.09%

…Stakeholders lament high cost of living crisis

…Experts highlight flooding, Naira redesign, 2023 election as inflation influencing factors

By Seun Ibiyemi, Ogaga Ariemu, & Matthew Dennis

The National Bureau of Statistics (NBS), on Tuesday disclosed Nigeria’s headline inflation rate increased to 21.09 per cent on a year-on-year basis in October 2022, a development bending towards trapping common Nigerians and the average income earners to poverty trap.

In the report, Nigeria’s housing water, electricity, gas, and other fuels (energy) inflation rate rose to 16.8 per cent for October 2022. This is the highest rate since March 2017, when the rate stood at 18.9 per cent

The inflation rate for this category increased to 16.8 per cent in October 2022 from 16.4 per cent in September 2022, and 10.4 per cent in the corresponding period of 2021.

This is according to the NBS Consumer Price Index (CPI) and Inflation Report for October released in Abuja on Wednesday.

According to the report, the figure is 5.09 per cent points higher compared to 15.99 per cent recorded in October 2021.

“This shows that the general price level for the headline inflation rate increased in October 2022 when compared to the same month in the preceding year.

“Meaning that in October 2022, the general price level was 5.09 per cent higher relative to October 2021.’’

According to the report, factors responsible for the increase in annual inflation rate include disruption in the supply of food products.

It said other factors contributed to the increase include import cost due to the persistent currency depreciation and a general increase in the cost of production such as the increase in energy cost.

The report said on a month-on-month basis, the Headline inflation rate in October 2022 was 1.24 per cent, which was 0.11 per cent lower than the rate recorded in September 2022 at 1.36 per cent.

“This means that in October 2022, the general price level for the headline inflation rate on a month–on–month basis declined by 0.11 per cent,” the report read partly.

According to the report, the factor responsible for the decline in the monthly inflation rate is a decline in the current month’s food index relative to the reference month index, which is due to the harvest season.

The report said the percentage change in the average CPI for the 12 months  ending October 2022 over the average of the CPI for the previous 12 months period was 17.86 per cent

“This indicates a 0.91 per cent increase compared to the 16.96 per cent recorded in October 2021,” it stated.

It said increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yielded the headline index.

The report said the food inflation rate in October 2022 was 23.72 per cent on a year-on-year basis, which was 5.39 per cent higher compared to the rate recorded in October 2021 at 18.34 per cent.

“The rise in food inflation is caused by increases in prices of bread and cereals, food products, potatoes, yams and other tubers, oil and fat,” it stated.

It said on a month-on-month basis, the food inflation rate in October was 1.23 per cent, which was a 0.21 per cent decline compared to the rate recorded in September 2022 at 1.43 per cent.

“This decline was attributed to the reduction in prices of some food items like tubers, palm oil, maize, beans, and vegetables.

“The average annual rate of food inflation for the 12-months ending October 2022 was 19.83 per cent, which was a 0.92 per cent points decline from the average annual rate of change recorded in October 2021 at 20.75 per cent,” the report stated.

The report said on a year-on-year basis in October 2022, the urban inflation rate was 21.63 per cent, which was 5.11 per cent higher compared to the 16.52 per cent recorded in October 2021.

“On a month-on-month basis, the urban inflation rate was 1.33 per cent in October 2022, this was a 0.12 per cent decline compared to September 2022 at 1.46 per cent,”

It said the corresponding 12-month average for the urban inflation rate was 18.38 per cent in October 2022.

“This was 0.85 per cent higher compared to the 17.53 per cent reported in October 2021,” the report said.

The report said on a year-on-year basis in October 2022, the rural inflation rate was 20.57 per cent, which was 5.09 per cent higher compared to the 15.48 per cent recorded in October 2021.

On states’ profile analysis, the report showed in October 2022, all items inflation rate on a year-on-year basis was highest in Kogi at 25.15 per cent, followed by Bauchi at 23.45 per cent, and Ondo at 23.45 per cent.

It, however, said the slowest rise in headline year-on-year inflation was recorded in Plateau at 19.02 per cent followed by Borno at 19.31per cent and Nasarawa at 19.39 per cent.

The report, however said in October 2022, all items inflation rate on a month-on-month basis was highest in Abuja at 3.18 per cent, followed by Kebbi at 2.80 per cent and Sokoto at 2.57 per cent.

“Kwara at -0.14 per cent, followed by Kogi at 0.06 per cent and Oyo at 0.30 per cent recorded the slowest rise on month-on-month inflation,’’ it stated.

The report said food inflation in October 2022, on a year-on-year basis was highest in Kwara by 30.79 per cent, followed by Kogi at 28.74 per cent and Imo at 28.64 per cent.

“Kaduna at 19.96 per cent, followed by Plateau at 20.17 per cent and Jigawa at 20.42 per cent recorded the slowest rise on year-on-year food inflation,” it said.

It, however, said on a month-on-month basis in October 2022, food inflation was highest in Sokoto at 3.55 per cent followed by Yobe by 3.31per cent and Kebbi at 3.16 per cent.

“Kwara at -0.76 per cent, followed by Kogi at -0.55 per cent and Akwa-Ibom at -0.21 per cent recorded the slowest rise on month-on-month inflation,” the report said.

Stakeholders lament

Speaking to Nigerian NewsDirect, the Executive Director of Nigerian Workforce Strategy and Enlightenment Centre (NIWOSEC), Dr. David Ehindero said the situation is getting worst by the day.

According to him, this harvest, season commodities like beans, flour are supposed to naturally depreciate in the market because of the supply power by farmers but the reverse is the case.

He said, “Have you seen the price of pepper, spaghetti, noodles and garri (cassava flake)? Garri that used to be regarded as poor man’s food is now gold; a crate of eggs costs almost N2,000 and average loaf of bread goes for about N500.

“One single bell pepper now sells for N200. Five litres of groundnut oil is now over N6000, as for palm oil, anything you see, you take it like that.

“But the most amazing increase has come from frozen foods like chicken, turkey, fish and the likes; these are classified as richman foods now. A kilogram of chicken and turkey is now almost N2,500 and no matter how you cut it, you can never get up to 10 pieces.

“Even fruits I used to buy for my children have galloped out of reach. These are things that are grown and produced here, yet we can’t afford them. Does this government want us to drop dead before they know we are suffering?” He lamented.

Enhindero stressed that the festive period this time, many families will not be able to have foods on the table because of the skyrocketed inflation at 21.09 percent.

…Flooding, Naira redesign, 2023 election inflation influencing factors — Experts

Reacting, an expert, Chief Economist Streetnomics, Gospel Obele, said the nation’s economic situation calls for an emergency solution.

Obele reacting to the latest inflation figure in an AriseTV interview monitored by Nigerian NewsDirect on Tuesday, said that the flooding in Nigeria, announcement of Naira redesign, forthcoming 2023 election are factors influencing the inflation figure.

Obele submitted that the Federal Government must consider an unstructured and collective approach to end the economic woes Nigerians are facing.

He said, “Supply will be further disrupted because farms, farmlands have been flooded in some parts of Nigeria. Christmas and elections are around the corner, Naira redesign will further reinforce inflation to perform worse into next quarter of 2023. There is the likelihood that there is going to be a further increase of the inflation rate.

“My concern is for the average Nigerian who is faced with an increased potential of a poverty trap and high cost of living crisis daily. I think Nigeria needs to act right now because we are in a state of emergency in terms of thinking through unstructured bases, not policy based solutions only. Policies will only pass the problem but won’t deal with the problem. We should look for a more collective approach to fixing the problem,” he stated.