Nigerians groan as inflation hits 20.77%, unemployment rate, 33per cent
…Experts blame disruption on food supply, currency depreciation, others
…CBN financing of fiscal deficit disturbing – Experts
…FG should review import policy on food, adopt flexible foreign exchange policy – Muda Yusuf
By Seun Ibiyemi, Ogaga Ariemu and Matthew Dennis
Nigeria’s headline inflation rate highest peak of 20.77 per cent since 1998 has evoked resentment and worsened standard of living. This follows hyperinflation rate depreciation of value of Naira, erosion of purchasing power and rising unemployment rate presenting hard economic conditions before citizens.
Statistics disclosed by National Bureau of Statistics (NBS), revealed on Monday that Nigeria’s headline inflation rate increased to 20.77 per cent on a ear-on-year basis in September 2022.
This is contained in a statement issued by the Statistician-General of the Federation and Chief Executive Officer, National Bureau of Statistics (NBS), Prince Semiu Adeniran, on Monday in Abuja.
The statement was on the Consumer Price Index (CPI) and Inflation Report for September.
The figure as disclosed is 4.14 per cent points higher compared to the 16.63 per cent recorded in September 2021.
“This indicates that in September 2022, the general price level was 4.14 per cent higher relative to September 2021,” the report read.
According to the report, factors responsible for the increase in the annual inflation rate include interruption in the supply of food products, increase in import cost due to the persistent currency depreciation and a general increase in the cost of production.
On a month-on-month basis, the headline inflation rate in September was 1.36 per cent, which was 0.41 per cent lower than the rate recorded in August 2022 at 1.77 per cent.
“This means that in September 2022, the headline inflation rate on a month–on–month basis declined by 0.41 per cent, relative to August 2022,” the report partly read.
The factor responsible for the decline in the monthly inflation rate in the last two months was a decline in the changes in the food index.
According to the report, this is relative to the reference month index, which is due to the present harvest season.
The percentage change in the average CPI for all items index for the 12 months ending September 2022 over the average of the CPI for the previous 12-month period was 17.43 per cent.
“This is showing a 0.60 per cent increase compared to 16.83 per cent recorded in September 2021,” the report revealed.
Increases were recorded in all Classification of Individual Consumption by Purpose (COICOP), divisions that yielded the Headline index.
The food sub-index increased by 23.34 per cent on a year-on-year basis in September 2022, 3.77 per cent higher compared to the rate recorded in September 2021 at 19.57 per cent.
“This rise in food inflation was caused by increase in prices of bread and cereals, food products, potatoes, yam, and other tubers, oil, and fat,” the report read.
On a month-on-month basis, the food inflation rate in September was 1.43 per cent. This was a 0.54 per cent decline compared to the rate recorded in August 2022 at 1.98 per cent.
The decline is attributed to a 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 September 2022 over the previous 12-month average was 19.36 per cent.
“This was a decline of 1.35 per cent points from the average annual rate of change recorded in September 2021 at 20.71 per cent,” the report stated.
In September 2022, consumer price index for urban consumers rose by 4.06 per cent on a year-on-year basis.
“That is in September 2022, the urban inflation rate was 21.25 per cent higher compared to the 17.19 per cent recorded in September 2021.
“On a month-on-month basis, the urban inflation rate was 1.46 per cent in September 2022, this was a 0.34 per cent decline compared to August 2022 at 1.79 per cent,” the Bureau said in the report.
The corresponding 12-month average for the urban inflation rate was 17.94 per cent in September 2022, showing a 0.53 per cent increase compared to the 17.41 per cent reported in September 2021.
The inflation rate for rural consumers in September 2022 was 20.32 per cent on a year-on-year basis, which was 4.24 per cent higher compared to 16.08 per cent recorded in September 2021.
“On a month-on-month basis, the rural inflation rate in September 2022 was 1.27 per cent, this is a 0.48 per cent decline compared to August 2022 at 1.75 per cent,” the Bureau said.
The corresponding 12-month average for the rural inflation rate in September 2022 was 16.94 per cent, showing a 0.68 per cent increase compared to the 16.26 per cent recorded in September 2021.
On the States’ profiles, all items inflation rate for September 2022 on a year-on-year basis was highest in Kogi at 23.82 per cent, followed by Rivers at 23.49 per cent, and Benue at 22.78 per cent.
“While the States with the slowest rise were Abuja with 17.87 per cent followed by Borno with 18.12 per cent, and Adamawa with 18.42 per cent,” the Bureau disclosed.
On a month-on-month basis, the State all items index for September 2022 recorded the highest rate in Jigawa at 2.58 per cent, followed by Yobe at 2.22 per cent and Benue at 2.05 per cent.
“While the States with the slowest rise were Abuja at -0.72, followed by Sokoto with -0.19 per cent and Adamawa with 0.25 per cent,” the report disclosed.
Reacting to the development, the Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf in a chat with Nigerian NewsDirect on Monday said the Federal Government should review the import policy of some foods as well as adopt a flexible foreign exchange policy.
According to him, “The mounting inflationary pressures in the Nigerian economy remain a major cause of concern. Headline inflation accelerated to 20.77 per cent in September as against 20.52 per cent in August. Food inflation maintained its uptrend rising to 23.34 per cent in September.
“Key inflation drivers have not abated, if anything, they have become even more intense. These factors include the depreciating exchange rate, rising transportation costs, logistics challenges, forex market illiquidity, hike in diesel cost, climate change, insecurity in many farming communities and structural bottlenecks to production. These are basically supply side issues.
“The accelerated growth in fiscal deficit financing by the Central Bank of Nigeria (CBN) is boosting liquidity in the economy and have a profound effect of fueling inflation. It is currently in the threshold of N20 trillion.
“The CBN financing of fiscal deficit has been elevated to disturbing levels with huge implications for money supply growth and consequent effect on inflation. It is inflation tax.
“Elevated inflationary pressures weaken purchasing power of citizens as real incomes are eroded, increases poverty incidence, aggravates pressure on production costs, negatively impacts profitability, erodes shareholders value and undermines investors confidence.
“In most cases, increases in production costs cannot be transferred to consumers. The implication is that manufacturers are also taking a hit. This is more pronounced where the demand for the product is elastic.
“Tackling inflation requires urgent government intervention to address the challenges bedevelling the supply side of the economy and the moderation of fiscal deficit monetisation.
“To give producers some succour, the government could tweak the tariff policies by granting concessionary import duty on intermediate products for industrialists.
“It is imperative at this point to review the import policy on some food items to provide some succour to citizens in the face of excruciating poverty. The CBN also needs to adopt a flexible exchange rate policy to address the problem of acute forex scarcity in the economy.”
On his part, a Financial Inclusion/Wealth Management expert, MD/CEO SD & D Capital Management Limited, Mr Idakolo Gbolade said that efforts put forward by CBN to tame inflation are not productive.
In his words, “The continuous rise in inflation is expected because measures taken by the CBN have not helped to ease inflation and factors affecting the inflationary trend have not abated. The foreign reserves do not have capacity to fund imports for up to a month.
“The Naira continues to weaken against the U.S. Dollar because Nigeria is not receiving enough revenue in Dollars to adequately intervene to stop free fall of the Naira.
“The hike in interest rate has not increased productivity as manufacturers are scaling back on production.
“The crude production level is still hovering around 1 million barrels per day and importation of refined petroleum products is taking a lot of Foreign Exchange thereby affecting other key sectors. The fiscal policies of the government presently coupled with anticipated borrowing will further hurt the economy,” he said.
Reacting, the Executive Director of Nigerian Workforce Strategy and Enlightenment Centre (NIWOSEC) Dr. David Kayode Ehindero said the inflation rate rising from 20.52 per cent in August 2022 to 20.77 per cent in September is worrisome and threatening to the economy.
He stressed that the Federal Government through the CBN need to urgently take drastic measures to tackle inflation rate before the country falls into recession.
Dr. Ehindero emphasised that the implementation of a fiscal policy such as higher income tax should be lowered and tax waiver is an option for supply of commodities to reduce their selling price.
According to him, the CBN should stringently introduce policies to reduce the circulation of Dollars in the forex and encourage export activities for local firms.
He added that the government at all levels should collaborate with the Federal Government in tackling the menace of unsecurity, oil thieves among others.
Following the disclosure of the inflationary pressure, Nigerians took to Twitter to express their frustration over the economy, lamenting the scourge of hyper-inflation, erosion of Naira and rising unemployment rate.
Reacting on Twitter, a tweep, @kenzorash:Stagflation said: “Nigeria should be used as case studies to study stagflation! What’s the benefit of stagflation? Only loss of confidence from foreign investors is coming to my head at the moment!”
Lamenting, a tweep, @EcoStructEngr said: “Inflation is 20.77%, dollar is about N740 and unemployment rate is 33%. Flood is destroying life and properties without no end or aid in sight, people are putting up house for sale to pay kidnappers’ ransom. Buhari has really ruined Nigeria.”
On the impact of erosion of the value of Naira amidst rising inflation, a tweep, @mbaka_paschal said: “Saving money these days is my least favorite thing to do. But then, cash is king, you need cash at every point in time. Looked at Nigeria’s inflation status and it’s over 20%. Your 1m is now 800k on paper but in real life, it’s actually worth less than 500k in the past 365 days.”
@dennitedane said: “At this time of Energy and food inflation Crisis in the world with Nigeria Natural Resources and vast Land Economy Should be top 10 in the world right now but Incompetent and bad leadership is holding us down to the bottom. Look into @PeterObi Economic Plans and say God Abeg.”
Disturbed by the rising rate of inflation, a tweep @AhonkhaiOmo, said: “Before this administration 12.5kg of cooking gas was not more than 5k (N5,000). Now Its over 10k (N10,000) (gas that we have in Nigeria). Now our inflation, unemployment rates is among the highest in the world. Our government borrows money without production of anything. Our currency has no value.”
