Nigeria’s headline inflation hit 21.82 percent in January, eclipsing the slight decline it recorded in December 2022, according to the nation’s statistics agency NBS.
The National Bureau of Statistics announced on Wednesday that Inflation rose by 0.47 percent to 21.82 percent in January, toppling the 21.34 percent recorded in December.
“Headline inflation for January 2023 was 21.82 per cent from 21.34 per cent in December 2022,” the NBS said.
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The upsurge was reported amid cash crunch resulting from recent decision of the Central Bank of Nigeria (CBN) to redesign N200, N500 and N1,000 notes, which has exposed many sectors of the economy, especially the informal sector, to further strains.
The NBS attributed the rise to increase in the costs of items across many sectors. The agency said food inflation increased from 23.75 percent in December 2022 to 24.32 percent in January, while core inflation, which excludes the costs of volatile agricultural produce, stood at 19.16 percent in January, 0.67 percent higher than the 18.49 percent recorded in the previous month.
Also, prices for gas, liquid fuel, airfare, vehicle spare parts, fuels and lubricants for personal transport equipment, solid fuel, and other items increased the most in January, the NBS inflation report said.
The report said the increase in the food index rate was tied to an increase in the prices of certain food items such as oil and fat, bread and cereals, fish, potatoes, yams and tubers, and so on.
The CBN had during its Monetary Policy Committee meeting held last month, raised the Monetary Policy Rate (MPR) to 17.5% from the previous 16.5%, a move it defended by pointing at the drop in December’s inflation rate. The CBN governor Godwin Emefiele said the decline is as a result of the previous MPC’s decision to raise the MPR.
However, with rising economic uncertainties associated with the naira redesign policy, there is concern that inflation will rise further in coming months. But allaying the concern, Kalu Aja, a financial analyst and economic adviser said the policy will have “no bearing” on inflation.
“Information is driven by food prices not currency unavailability,” he told Tekedia.
“Inflation (CPI) is driven by food prices,” he added.
Against the backdrop of the naira redesign policy, Emefiele had in a statement on Tuesday, noted that inflation is declining as a result of its implementation. He said the cost of goods and services are reducing across different markets, citing data from market sources.
“The policy is typically expected to cause deflation in the market as less cash holding reduces currency outside banks and retards money circulation.
“The accompanying decline in money supply will thus slow pace of inflation.
“As you can see, we have stated to witness inflation trending downwards, following general price stability in almost all genre of markets including for goods and financial products.
Citing market analysis, he said that an effective implementation of the policy could by itself scrape four percentage points off the current level of inflations as it steadily slows inflation rate to about 18.0 percent by mid-2023.
“This is quite achievable, as data from our market sources indicate that the prices of grains and key staples, around Suleja and Lambata markets for instance, have generally been on the downward trend since the beginning of the policy.
“The price for soya beans has dropped from N30,000 to N22,000. Maize from N18,000 to N16,000. The price of a bull fell from N400,000 to N330,000 and ram from N75,000 to N50,000,” he said.