Despite interest rate hike, inflation hits 22.22%
By Seun Ibiyemi
Nigeria’s headline inflation rate rose to 22.22 per cent in April 2023, a 0.18 per cent point higher than the 22.04 per cent recorded in the previous month.
According to the latest Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS), Nigeria’s inflation rate has increased for the fourth consecutive month, maintaining the highest rate in 17 years. Compared to the corresponding period of 2022, inflation increased by 5.4 per cent from 16.82 per cent recorded in April 2022.
On a month-on-month basis, the All-Items Index in April 2023 was 1.91 per cent, which was 0.05 per cent points higher than the rate recorded in March 2023 (1.86per cent). This means that in April 2023, on average, the general price level was 0.05 per cent higher relative to March 2023.
Nigeria’s inflation rate continues its uptrend despite multiple interest rate hikes by the central bank to tame the rising rate. The CBN has increased Monetary Policy Rate (MPR) from 11.5 per cent to 18 per cent between May last year and March 2023.
The food inflation rate in April 2023 was 24.61 per cent on a year-on-year basis, which was 6.24 per cent points higher compared to the rate recorded in April 2022 (18.37 per cent) and 24.35 per cent recorded in the previous month.
The rise in food inflation on a year-on-year basis was caused by increase in prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, and Spirits.
The “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce, stood at 20.14 per cent in April 2023 on a year-on-year basis.
This shows that it was up by 5.96 per cent when compared to the 14.18 per cent recorded in April 2022. It is also higher than the 19.86 per cent recorded in March 2023.
The highest increases were recorded in prices of gas, air transport, liquid fuel, vehicle spare parts, fuels, and lubricants for personal transport equipment, medical services, and road transport.
The contributions of items on the divisional level to the increase in the headline index are; food and non-alcoholic beverages (11.51 per cent), housing water, electricity, gas and other fuel (3.72 per cent), clothing and footwear (1.7 per cent), and transport (1.45 per cent).
During the month under review, all items inflation rate (on a year-on-year basis) was highest in Bayelsa (26.14 per cent), Kogi (25.57 per cent), and Rivers (24.95 per cent). On the flip side, Borno (19.06 per cent), Taraba (19.64 per cent) and Sokoto (19.90 per cent) recorded the slowest rise in headline inflation on a year-on-year basis.
On a month-on-month basis, however, April 2023 recorded the highest increases in Cross River (3.05 per cent), Bayelsa (2.92 per cent), Rivers (2.62 per cent), while Katsina (0.52 per cent), Jigawa (0.74 per cent) and Osun (0.96 per cent) recorded the slowest rise on.
In terms of food inflation on a year-on-year basis, it was highest in Kogi (29.50 per cent), Kwara (29.48 per cent), and Bayelsa (29.38 per cent), while Sokoto (19.55 per cent), Taraba (20.20 per cent) and Jigawa (20.68 per cent) recorded the slowest rise.
Nigeria continues to suffer increasing inflation numbers, defying the contractionary monetary stance of the CBN. Inflation has jumped by 652 basis points between February 2022 to date, moving in tandem with interest rates.
Between May 2022 and March 2023, interest rates have been increased by 650 basis points to 18 per cent from 11.5 per cent. This is yet to weaken the pace of inflation in the country.
The surge in energy prices, coupled with exchange rate volatility and a severe cash crunch have contributed to the rising rate of inflation in the country, which has remained unabated.
The inflation rate rose to its highest level since September 2005 despite multiple interest rate hikes by the apex bank.
The rising inflationary pressure indicates a worsening erosion of Nigerians’ purchasing power.
