Nigeria’s inflation rate leaped to 15.75% in December to reach its highest level since 2017, marking the 16th month of consecutive increases, according to data published by Nigeria Bureau of Statistics (NBS) on Friday.
This is coming a few weeks after Nigerian government announced the reopening of its closed land borders.
The NBS data reported that the composite food index rose by 19.56% in December from 18.30% in November due to high cost of some food items.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, meat, fruits, vegetable, fish and oils, and fats,” NBS said.
The increase in inflation rate has been expected due to the land borders that were closed since August 2019. In December, the federal government reopened the borders to honor its AfCFTA agreement, but the culminated harm caused by the closure has become an inflation propeller Nigeria’s economy will have to battle with into the near future.
Experts also pointed to other factors that have contributed to the high rise in inflation. Analysts at the Financial Derivatives Company Limited, last week described the inflation, which it predicted would rise by 0.51% to 15.4% in December, as “a hydra-headed monster that has eroded the disposable and discretionary income of consumers.”
The analysts explained that factors like hike in petrol price, electricity tariff, general reductions in subsidies, and improved tax mobilization has affected consumers’ disposable income negatively.
“The continued rise in the general price level is driven largely by forex rationing, output and productivity constraints, higher logistics and distribution costs,” they added.
NBS said the highest increases were recorded in prices of passenger transport by air, medical services, hospital services, shoes and other footwear, and passenger transport by road, among others.
Another factor which has been fingered is insecurity. Economic experts said continued insecurity in northern parts of the country where foods come from is responsible for the increase in prices of food items.
“We must recognize that the disruption we have had in the northern part of the country in terms of food production has a direct impact on food inflation,” said CEO of Cowry Asset Management Limited, Johnson Chukwu.
“We should expect these pressures to continue in the next couple of months. We should expect that the price of diesel will further increase because crude oil price has moved up and exchange rate has also deteriorated,” he added.
A host of other issues, including rural-urban migration has also been blamed.
But with the border reopened, there is optimism that the inflation will record a significant drop if the government lifts import restrictions on some food items to fill the gap created by insecurity in food producing states in northern Nigeria.
Additionally, a shift goes to winning the war on terrorism and banditry in the north. Economists say sustainable agricultural activities will increase food supply and minimize the rising cost of food items.
However, with the current situation of farmers’ vulnerability, food security is an aim not so close. In November, BBC Hausa reported that farmers in Kaduna, Katsina and Zamfara States pay periodic taxes to have access to their farms. The taxes, which range from N800,000 to N3 million have become another obstacle, in addition to the risk of being kidnapped in the farm, that farmers have to contend with.
“In my village, we pay N800,000 as tax and N900,000 as harvest fees,” a resident of Dankurmi Village in Maru Local Government Area of Zamfara State said. “Even if you pay, they will come to your farm and abduct you.”
With the current security situation in the north and the food import ban, the newly reopened border would only do a little to quell the upsurge of inflation.