Inflation in Nigeria
has been on the rise since August 2019 when the country shut its land borders
with its neighbours to curb smuggling.
It later became
worse with the effect of the novel coronavirus on the global economy.
The latest report on
the consumer price index (CPI) by the National Bureau of Statistics (NBS) on
Friday showed that the inflation rate for the month rose by about 0.16 per cent
point, from 12.40 per cent attained in May.
The border closure
had affected the availability of rice, vegetable oil, frozen food, and other
staples, causing prices of the commodities to be on the increase.
In the new report
for June, the composite food index rose by 15.18 per cent in June 2020 compared
to 15.04 per cent in May 2020.
This rise in the food
index was caused by increases in prices of Bread and Cereals, Potatoes, Yam and
other tubers, Fruits, Oils and Fats, Meat, Fish and Vegetables.
Also, the Core
inflation, which excludes the prices of volatile agricultural produce stood at
10.13 per cent in June 2020, up by 0.01 percent when compared with 10.12 per
cent recorded in May 2020.
“The highest
increases were recorded in prices of Medical services, Hospital services,
Passenger transport by road, Pharmaceutical products, Motor cars, Paramedical
Services, Maintenance and repair of personal transport equipment, Bicycles,
Motorcycles, Vehicle spare parts, and Other services in respect of personal
transport equipment.
Inflation in states
In June 2020, the
all items inflation, when compared to June 2019, was the highest in Bauchi,
Sokoto, and Ebonyi while Cross River, Lagos, and Kwara states recorded the
slowest rise in headline Year on Year inflation.
For food inflation
year on year, inflation was recorded highest in Sokoto, Plateau and Abuja while
Lagos Ogun and Bauchi recorded the slowest rise.
“On month on month
basis, however, June 2020 food inflation was highest in Kogi, Benue, and
Zamfara, while Ondo, Anambraand Lagos recorded the slowest rise.”
‘Rise expected’
According to an
economic analyst, Basil Enwegbara, the rise in inflation is to be expected with
the various intervention programmes being done by the Central Bank of Nigeria.
He also said the rise is not necessarily an indication of a bad economy,
“That an economy has
high inflation does not mean the economy is bad nor does it mean an economy is
doing great (if) it has low inflation.”
He explained that
high inflation should be expected if the productivity of a country is low, if
there is high level of unemployment if there is a high import-dependency and if
a growing economy is investing.
“When investing, you
print more money, which is what the CBN is doing through its intervention fund,
because there will be more naira in circulation.
“Nigeria is
currently undergoing economic restructure. What the CBN is doing now should
have been done before now. It is what the United States did in the 1930s when
it employed Marriner Eccles.”
Mr Eccles was the US
Fed Chairman who revolutionised central banking by creating an avenue for small
businesses to thrive and create jobs.
“He pumped an
unbelievable amount of new money into America’s economy by printing it. Even
though it caused an unprecedented high level of inflation, it grew the economy
at a historic level,” Mr Enwegbara said.
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