Inflation Rate Increases For The Seventh Month In A Row

Nigeria’s inflation rate increased for a seventh straight month in June, reaching 18.6%.

Comparing this to the 17.7% per cent recorded in May, there has been an increase of 0.9 per cent.

The National Bureau of Statistics (NBS), which also reported that food inflation jumped by 1.1 per cent to 20.6 per cent from 19.5 per cent in May, made this disclosure today in its Consumer Price Index (CPI) Report.

The bureau stated: “In June 2022, the inflation rate increased to 18.60 per cent on a year-on-year basis. This is 0.84 per cent points higher compared to the rate recorded in June 2021, which is 17.75 per cent.

“Increases were recorded in all COICOP divisions that yielded the Headline index. “On a month-on-month basis, the Headline inflation rate increased to 1.82 per cent in June 2022, this is 0.03 per cent higher than the rate recorded in May 2022 (1.78 per cent).”

Concerning food inflation, NBS said: “The composite food index rose to 20.60 per cent in June 2022 on a year-on-year basis; the rate of changes in average price level declined by 1.23 per cent compared to 21.83 per cent in June 2021.

“The rate of changes in food prices compared to the same period last year was higher due to higher foods prices volatility caused by COVID 19.

“This rise in the food index was caused by increases in prices of Bread and cereals, food products, potatoes, yam, and other tubers, meat, fish, oil and fat, and wine.”

However, given the negative results of the first half of the year, economists and financial analysts forecast additional inflationary pressure in the second half of the year.

According to CardinalStone’s 2022 Mid-Year Macroeconomic Outlook, financial analysts said: “We see scope for sustained inflationary pressures in H2’22 due to the negative impact of the prior year’s low base.

“In addition, we see less respite for energy costs in the near term, with diesel and gas prices poised to stay elevated.”

Analysts at Cowry Assets Management Plc stated that hyperinflation would, among other things, lead to desperation/survival behaviours and vulnerability to get-rich-quick schemes in their H1’22 Macro-Economy Review. They also predicted that the price level would continue to go high.

They said: “Hyper-inflation will lead to a drop in Purchasing power, decline in aggregate demand with attendant slowdown in productivity and employment, desperation/survival modes and susceptibility to get-rich quick schemes.

“Higher energy prices and rising global food insecurity will keep inflation risk elevated.”