Rise in Inflation Rate

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Yemi Kale, CEO, NBS
Yemi Kale, CEO, NBS

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National Bureau of Statistics price index for the month of July shows that the inflation rate has risen slightly as against what obtained in the month of June

By Anayo Ezugwu  |  Sep. 1, 2014 @ 01:00 GMT

NIGERIANS across the county are groaning under rising cost of food and other essential items. This is confirmed by the Consumer Price Index, CPI, released on Monday, August 18, by the National Bureau of Statistics, NBS, for the month of July. The price index showed a slight increase to 8.3 percent from 8.2 percent recorded in the previous month. The rise in the inflation rate was the fifth consecutive month of year-on-year increases in the headline index.

According to the CPI report, the increase from 8.3 percent represents 0.01 percent rise from the 8.2 percent recorded in June. The CPI report noted that the faster pace of price increases recorded in the headline index were as a result of an increase in multiple divisions that contributed to the headline index.

The report indicated that the food index edged higher to 9.9 percent in July from 9.8 percent in June. The release by NBS showed that increases in the prices of some food stuffs, such as grains, bread and meat was responsible for the rise of the inflation rate from 8.2 percent to 8.3 percent, while the pace of the increase was weighed upon by slower increases in the dairy, sugar, jam, honey, chocolate and confectionery as well as coffee, tea and cocoa groups.

Similarly, the report disclosed that after increasing at a faster pace for the previous three months, the pace of price increases measured by the core sub–index eased in July. According to the NBS, prices during the period under review rose by 7.1 percent, year-on-year, a full percentage point lower from the rate recorded in June. It equally noted that there were slower price increases in the alcoholic beverages, tobacco and kola; clothing and footwear; housing, water and electricity. The gas and other fuel; and many other divisions were said to have also contributed to the mooted increases in the core sub -index.

It should be noted that the headline index is made up of the core index and farm produce items. “On a month-on-month basis, price increases in the headline index eased for the second consecutive month. Prices increased by 0.65 per cent in July, lower from a 0.77 per cent increase in June. The slower price increases of the headline index in July were driven by a slower rise in all areas that contribute to the index.”

Godwin Emefiele, governor, Central Bank of Nigeria, CBN, had last month identified pressure from food as core inflation and the risks that could emanate from the likely increase in aggregate spending in the run-up to the 2015 general elections as pressure points to monetary policy stability. “We are monitoring the situation, monitoring the liquidity situation in the money market; monitoring the spending of Nigerians and the government to the run up to the elections. And as we begin to see, the macro-economic variables are moving in the direction that we expect, you will begin to see the reversal in interest rates in the direction where we want it to be,” he said.

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