Inflation rate in Nigeria now is 13.7 percent as increase in electricity tariff and fuel price push up prices of goods and services in the country
| By Anayo Ezugwu | May 30, 2016 @ 01:00 GMT |
THIS is not the best of times for Nigerians. The increase in electricity tariff, Naira depreciation and now the increase in the price of fuel have combined to push up prices of goods and commodities out of the reach of the common man. The purchasing power of the masses, especial fixed income earners have been eroded by the double digit inflation. Also, the National Bureau of Statistics, NBS, in its Consumer Price Index, CPI, report for the month April, shows that the economic is in distress.
According to the NBS, the country’s inflation rate for April is 13.7 percent compared to 12.8 percent in March and 11.4 percent in February. It attributed the latest inflation rate to the increase in electricity tariff and higher prices of fuel. The NBS, in its CPI report, which measures inflation, blamed the 0.9 percent rise in the headline index on the lingering structural constraints which had continued to manifest in electricity rates and kerosene prices. The NBS said the impact of higher prices in petrol and vehicle spare parts contributed significantly to the core sub-index in April.
“These items as well as other imported items continued to have ripple effects across many divisions that contribute to the core. The index increased by 13.4 percent in March, roughly 1.2 percent points from rates recorded in March,” it stated.
According to the CPI figures for April, higher rate of increase relative in the month March was reflected in faster increases across all divisions which contributed to the index with the exception of restaurants, and hotels division which increased, though at a slower pace for the third consecutive month.
The NBS further noted that the food index increased by 13.2 percent in April, up by 0.4 percent from rates recorded in March as all major food groups which contribute to the food sub- index increased at a faster pace driven by higher food prices in fish, bread and cereals, and vegetables groups.
It said increases in imported as well as domestically produced foods further resulted in a higher increase in the food sub-index in April. “All items less farm produce” or core sub-index increased by 13.4 percent in April or 1.2 percent from 12.2 percent recorded in March. On a month-on-month basis, the core sub-index increased at a slower pace for the second consecutive month in April, increasing by 1.7 per cent, 0.2 percent lower from 1.9 percent in March.
“In April, on a month-on-month basis, the highest price increases were recorded in the electricity, motor cars, fuels and lubricants for passenger transport (petrol), and liquid fuels (kerosene) groups. The average twelve month annual rate of rise of the index was recorded at 9.6 percent for the twelve- month period ending in April 2016, 0.5 percent points higher from the twelve month rate of change recorded in March (9.1 percent).”
The NBS further stated that the average monthly price paid by Nigerian households for a litre of petrol across the country increased to N162.82/litre in April compared to N135.69/litre in March. However, figures showed that on the monthly average, Nigerians have continued to purchase petrol above the official rate in the period under review.
Reacting to the rise in the CPI, analysts at the Lagos-based CSL Stockbrokers Limited, projected that in year-on-year terms, the inflationary pressure would remain in place for the remainder of 2016. The firm in a report pointed out that the recent increase in fuel prices would also add to inflationary pressures via three channels.
“Firstly, the transport component of the price basket (6.5 percent) will see increases in line with fuel price hikes. Secondly, the input costs of businesses will rise and this will likely result in increases across a range of goods and services in the consumer price basket from food (5.07 percent) to clothing and footwear (7.7 percent).
“Thirdly, the increase in demand for foreign exchange on the parallel market resulting from fuel importers sourcing their forex on this market will likely see depreciation of the parallel market, in our view, adding to imported inflationary pressures. Taking all of the above into account, we have made an upward revision to our year-end inflation forecast, which we now see coming in at 15.6 percent year-on-year up from a previous estimate of 14.5 percent,” CSL stated.