Nigeria’s annual inflation rate rose to 22.22 precent in April 2023, buoyed by a sharp increase in food inflation, signifying the highest rate hike in 17 years.
Data released by the National Bureau of Statistics (NBS) on Monday in Abuja showed that food inflation increased to 24.61 percent Year-on-Year, with prices of various food items increasing.
Nigeria’s inflation rate keeps rising despite multiple interest rate hikes by the Central Bank of Nigeria (CBN), with the core inflation rate standing at 20.14 percent in April 2023.
The NBS in its report said: “In April 2023, the headline inflation rate rose to 22.22 percent relative to March 2023 headline inflation rate which was 22.04 percent. Looking at the movement, the April 2023 inflation rate showed an increase of 0.18 percent points when compared to March 2023 headline inflation rate.
“Similarly, on a year-on-year basis, the headline inflation rate was 5.40 percent points higher compared to the rate recorded in April 2022, which was 16.82 percent. This shows that the headline inflation rate on a year-on-year basis increased in April 2023 when compared to the same month in the preceding year (i.e., April 2022)”.
According to the NBS, on a month-on-month basis, the All-Items Index in April 2023 was 1.91 percent, which was 0.05 percent points higher than the 1.86 percent recorded in March 2023, meaning that in April 2023, on average, the general price level was 0.05 percent higher relative to March 2023.
“The food inflation rate in April 2023 was 24.61 percent on a year-on-year basis, which was 6.24 percent points higher compared to the 18.37 percent recorded in April 2022.
“The rise in food inflation on a year-on-year basis was caused by increases in prices of Oil and fat, Bread and cereals, Fish, Potatoes, Yam and other tubers, Fruits, Meat, Vegetable, and Spirits”, the NBS explained.
It noted that on a month-on-month basis, the food inflation rate in April 2023 was 2.13 percent, showing 0.06 percent points higher compared to the 2.07 percent recorded in March 2023.
The average annual rate of food inflation for the 12 months ending April 2023 over the previous 12 months average was 23.22 percent, which was 4.35 percent points increase from 18.88 percent average annual rate of change recorded in April 2022.
The NBS stated that “All items less farm produce” or Core inflation, which excludes the prices of volatile agricultural produce stood at 20.14 percent in April 2023 on a year-on-year basis, up by 5.96 percent when compared to the 14.18 percent recorded in April 2022.
The highest increases were recorded in prices of Gas, Passenger transport by Air, Liquid fuel, Vehicle spare parts, Fuels, and lubricants for personal transport equipment, Medical services, Passenger transport by road, etc.
On a month-on-month basis, the Core inflation rate was 1.46 percent in April 2023. It stood at 1.84 percent in March 2023, down by 0.38 percent.
The average 12 months annual inflation rate was 17.91 percent for the 12 months ending April 2023, indicating 4.23 percent points higher than the 13.68 percent recorded in April 2022.
While reacting, Professor of finance and capital market at Nasarawa State University, Uchenna Uwaleke, said:”The increase in headline inflation to 22.22 percent for month of April did not come as a surprise in view of the rising inflation trend in many economies partly caused by the Russian Ukrainian conflict.
“Be that as it may, the reality is that the Nigerian case has a lot to do with domestic structural factors.
“It is worth mentioning that the NBS, in its April Consumer Price index report, provided a clue as to the major items driving the inflationary pressure in Nigeria to include food, electricity, housing and transport.
“In the light of this revelation, what becomes clear is that the monetary policy tightening stance of the CBN alone may not address the challenge. The continuous rate hikes embarked upon since May 2022 has not yielded the desired results.
“In order to increase food output and significantly bring down food inflation, the need to tackle the seemingly intractable security challenge facing the country as well as invest more in mechanized Agriculture cannot be overemphasized.”
Also lending his voice, Managing Director and Chief Executive Officer, Dignity Finance & Investment Ltd, Dr. Chijioke Ekechukwu, said: “Inflation rate is expected to rise, considering the various drivers of same. The drivers are still persisting to date. The cost of petroleum products, especially AGO, has not reduced yet, which still keeps the cost of production high. The exchange rate, although stabilized in the last few weeks, is still high at N745 per dollar, and the availability of foreign currency remains a mirage.
“In my opinion, it is not all the time that we continue to use monetary policy to check the inflation rate. Some of the causes of high inflation, like insecurity, require other measures different from monetary policy. This is necessary to note so that we don’t continue to tighten when we are indeed meant to loosen the economy”.