Nigeria inflation rose to 16.5 per cent in June, highest in over a decade and the fifth monthly increase in a row, data from National Bureau of Statistics showed.
The inflation rate increased to 16.5 per cent from 15.6 in May, the highest rate since October 2005, according to data on the Central Bank of Nigeria’s (CBN’s) website.
The rise reflected higher prices for electricity, transport and food, a separate index for which rose to 15.3 per cent from 14.9 per cent in May, the NBS said. “In June, the consumer price index which measures inflation continued to record relatively strong increases for the fifth consecutive month,” it said.
According to a report by the National Bureau of Statistics (NBS), the highest increases were in the electricity, liquid fuel (kerosene), furniture and furnishings, passenger transport by road, and fuels and lubricants for personal transport. Other drivers to the increase are energy prices, imported items and related products. These have been persistent drivers of the core sub-index.
“The core index increased by 16.2 per cent in June, up by approximately 1.2 percentage points from rates recorded in May (15.1 per cent). During the month, the highest increases were seen in the electricity, liquid fuel (kerosene), furniture and furnishings, passenger transport by road, and fuels and lubricants for personal transport equipment,” the report noted.
The report also said that while imported foods continue to increase at a faster pace, the food sub index on the aggregate increased, albeit at a slower pace in June relative to May.
The index, it said, increased by 15.3 per cent (year-on-year) in June up by 0.4 percentage points from rates recorded in May, adding that the index was weighted upon by a slower increase in the vegetables and “sugar, jam, honey, chocolate and confectionery” groups.
On month-on-month, the headline index moved in a sideways fashion since February, the first month of a pronounced increase in rates this year. Specifically, in June, the index increased by 1.7 per cent, lower by roughly 100 basis points from rates recorded in May.
“It should be noted that the headline index is made up of the core index and farm produce items. As processed foods are included in both the core and food sub-indices, this implies that these sub-indices are not mutually-exclusive.”
“Year-on-year, both the urban and rural indices increased albeit at a faster pace in June. The urban index rose by roughly 100 basis points from 17.1 per cent in May to 18.1 per cent in June, while the rural index increased by 0.7 per cent points from 14.3 per cent in May to 15.1 per cent in June. On a month-on-month basis both the urban and rural indices increased at a slower pace in June. The urban index increased by 1.8 per cent during the month, 120 basis points lower from 3 per cent in May. In addition, the rural index increased by roughly 1.6 per cent in June, 90 basis points lower from 2.5 per cent in May.
“The percentage change in the average composite CPI for the 12-month period ending in June 2016 over the average of the CPI for the previous 12-month period was 11.4 per cent, higher from 10.7 per cent recorded in May. The corresponding 12-month year-on-year average percentage change for the urban index increased from 11.2 per cent in May to 11.9 per cent in June, while the corresponding rural index also increased from 10.4 per cent in May to 10.9 per cent in June,” the report noted.
Note that the Consumer Price Index (CPI) measures the average change over time in prices of goods and services consumed by people for day-to-day living. The construction of the CPI combines economic theory, sampling and other statistical techniques using data from other surveys to produce a weighted measure of average price changes in the Nigerian economy.
The weighting occurs to capture the importance of the selected commodities in the entire index. Key in the construction of the price index is the selection of the market basket of goods and services. Every month, 10,534 informants spread across the country provide price data for the computation of the CPI. The market items currently comprise 740 goods and services regularly priced.
Nigeria has seen revenues plunge with oil prices, with pressure on the naira helping to fuel inflation. The naira hit 295.25 in thin trade, a month after the CBN caved in to months of pressure to remove its currency peg and effectively devalue the unit in response to falling prices for oil.
Prices rose by 1.7 per cent in the month. The median of seven economist estimates compiled by Bloomberg was for inflation to quicken to 16.2 per cent.
Food prices rose 15.3 per cent in June from a year earlier, compared with 14.9 per cent in May. The highest increases were in the costs of fish and meat, fruit and vegetables and bread and cereals, the statistics office said.